The Financial Advice Association Australia (FAAA) has expressed it is “deeply disappointed” the Senate Economics References Committee has recommended the inquiry into wealth management companies not continue.
However, the industry body has confirmed it will continue to pursue other paths to have recent financial product provider collapses, such as Dixon Advisory, the Shield Master Fund and First Guardian Master Fund, investigated.
“The decision to end the inquiry seems extraordinary, particularly in the light of recent news about the collapse of Shield and First Guardian, potentially involving over $1 billion in consumer losses from their super,” FAAA chief executive Sarah Abood noted.
FAAA policy, advocacy and standards general manager Phil Anderson said the association had advocated strongly for the inquiry, working with parliamentarians like Senator Pauline Hanson to have it launched. The member body was hopeful investigations into the recent collapse of the aforementioned entities would then eventuate.
“We are going to certainly pursue other options, other parliamentary inquiry options. We’ll be talking to all the key political stakeholders. One that’s been mentioned as an alternative is the Parliamentary Joint Committee on Corporations and Financial Services and that would be a very reasonable and appropriate choice,” Anderson explained.
In July, the Compensation Scheme of Last Resort revealed estimated claims costs relating to personal advice in 2025/26 were $67.3 million, or $47.3 million in excess of the $20 million limit on levies. As such, many in the financial services industry had hoped the inquiry into wealth management companies would be able to reveal some of their liabilities from these recent events.
“The system is designed in a way that financial advice is the easiest and invariably the first choice to pursue in order to get compensation,” Anderson said.
The FAAA is concerned the extra financial pressure placed on financial advisers as a result of these product collapses will continue to see more exit the industry as the need for advice in the community grows.
“Client detriment is a really bad thing, but then you’ve got the flow-on consequences. If the advice profession has to pay to fix up this mess, then who would want to stay a financial adviser and have such a huge contingent liability over their heads? Why would you want to join this profession? Why wouldn’t you leave and do something else?” Anderson said.
