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Everyone benefits from transparency

CONSUMERS will benefit from increased transparency and protection when the Financial Services Reform Act is introduced on March 11 next year.

Australian Securities and Investment Commission WA regional commissioner Michael Gething, Freehills partner Andrew Shearwood and Certified Practising Accountants WA president Kevin Judge told last week’s Business News Financial Service Reform Breakfast the Act would bring sweeping changes to the financial services industry.

Mr Gething said that, under the regime, a new degree of disclosure would be introduced which, if produced correctly, would not only meet the requirements of the Act, but would have benefits for both the business and the consumer, he said.

“The Act states that financial service providers have to produce documents that consumers will understand ... they have to be worded and presented in a clear and concise manner,” he said.

“The first financial institution that gets this right will have a huge market advantage over everyone else, because if the consumer understands what they are buying, the protection and advice given they will be happy to work with that institution.”

Financial service providers will have to give their clients a product disclosure statement, financial services guide and a statement of advice.

CPA WA president Kevin Judge said this greater degree of disclosure was designed to benefit consumers but would have end benefits for the financial services industry, the reputation of which had been damaged in recent times.

“The FSR Act sets the industry a high benchmark by way of tougher standards, which are long overdue,” he said.

Freehills partner Andrew Shearwood said the new laws raised interesting licensing issues for insurance agents and brokers operating a multi-agency.

“If they are appointed as an authorised representative of more than one insurer, then they must get consent from each insurer to act as a representative for others, because the insurers will be jointly and separately for the activities of that multi-agent,” Mr Shearwood said.

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