@MarsC I hear you. And I am generally the first to say that,...

@MarsC

I hear you. And I am generally the first to say that, whenever politics are involved, there is a high degree of undesirable irrationality at play.

But, in the specific instance of conflict of interest arising from providing financial advice and selling financial products at the same time, I do not see industry fragmentation as being in the best interest of anyone. Instead, I think a lot could be achieved, and without significantly increasing operational costs for service providers, by introducing regulation that focusses on removing the conflicted incentives.

For example:

1) Commissions (and/or other forms of remuneration) for selling in-house products can be removed.

2) Thresholds can be set for the maximum percentage of customer funds that may be invested into in-house products.

3) Introduction and periodic disclosure of Approved Product Lists can be made compulsory for all advisers.

This list is obviously far from exhaustive, but I hope it gives you an idea.

Also, If you look at what has happened within the global financial industry since the GFC, I would say that a very material amount of new regulation has been introduced, but without the need to significantly alter existing business models. So, a unilateral move from Australia in the direction of financial industry split-ups would be kind of odd, in the scheme of things, other than not necessarily in the best interest of consumers.

That said, the risk of an adverse outcome (in the sense of vertical integration being abolished) is obviously still there. What makes me feel comfortable about that risk is that, under reasonable assumptions, its likely economic impact appears to be already fully priced in.