Make no mistake it won’t be pretty. Some practices within the financial services industry, and not only the banks but large institutions and dealer groups, have not been in the consumers best interests. They have been conflicted, biased and designed primarily to add to bottom line profit.

We will see numerous examples where AFSLs (perhaps not just the banks) have not shown a duty of care to their customer. Where ludicrous financial incentives were provided to those offering financial advice based on volume. And where institutions recommended clients to invest in company owned products, rather than proposing options that were in the best interest of their client.

So what will happen next?

Nothing! Well, nothing meaningful that’s for sure.

There will be reputational damage to certain brands, perhaps some fines dished out, but I doubt anything material will come from this other than a promise or two from the institutions exposed that certain practices won’t continue, which we all know is garbage.

What should happen next?

To this point in time, any changes to the financial services industry have been akin to patching a crack in the wall. But a crack can be a symptom of a shaky foundation and the financial services industry’s foundation is precarious. Patch jobs are not going to cut it.

Let’s be honest, the industry was born out of selling products to unsuspecting consumers and “financial advisers” being paid by commissions and volume based payments to the product manufacturer. Client’s best interests…what are they??

Yes, commissions have been removed, sort of. Commissions being received prior to FoFa arriving in 2014 have been grandfathered, which means they still exist and will ensure that financial products for many customers are left untouched so that some advisers can continue riding the gravy train. Mark my words, commissions are still paid one way or another…

A courageous government would start again by rebuilding the foundations and basing them on one simple premise – “what’s in the consumer’s best interest?”

What should the areas of focus be?

• Financial adviser education standards
• Complete removal of commissions (old or new)
• Separation of license powers (advice verses product)

Patch jobs will not repair the loss of trust and faith of consumers. Those pushing for the Royal Commission think they are representing the consumers out there feeling ripped off by the big end of town. But they know better than anyone it’s all hot air. Consumers should not be fooled.

I said that I was selfishly looking forward to the Royal Commission. Because as a 30+ year, truly independent, self-licensed, fee for service business where client best interests form a non negotiable part of our culture, Hewison Private Wealth looks forward to welcoming some new clients looking for an adviser they can trust again.  An independent financial adviser who will deliver a financial plan that addresses their fears and their goals, allowing them to finally sleep at night.

Hewison Private Wealth is a Melbourne based independent financial advice firm. Our financial advisers are highly qualified wealth managers who structure financial and investment advice tailored to your individual needs.