Heavy regulation and compliance requirements brought on by the corporate regulator as part of the Future of Financial Advice (FOFA) reforms have stalled the industry’s push towards professionalism.
At the inaugural Institute of Public Accountants (IPA) National Congress on the Gold Coast last week, a panel discussion focused on the challenges and potential problems associated with the FOFA reforms.
SMSF Professionals’ Association of Australia (SPAA) chief executive Andrea Slattery said the industry body had been involved in 27 major reviews since its establishment 11 years ago and highlighted the issues in relation to advisers attempting to increase professional standards at the same time as dealing with the FOFA reforms.
“One of the things that the regulator, in this instance ASIC with FOFA, is that it wanted to be the organisation that took over the minimum quality of advice; it wanted to be the body that set the standard and be all [things] to everybody,” Slattery told delegates.
“One of the things that have been most difficult is the challenge of helping people to grow their competence and actually challenge their own professionalism [in light of] how that works with more regulation, more restrictions and more compliance.
“It becomes impossible to actually move forward.”
As an example, she used the best interest requirement, which emerged due to customer expectation.
“The regulators thought they needed to bring that in, whereas naturally if there is an ability to achieve value and service, and meet those expectations, that should be automatic,” she said.
IPA chief executive Andrew Conway said the role of professions and professional bodies was vital in relation to the regulation of their members and framing policy discussions with government.
“When it launched the FOFA reform process, the government outlined that the overarching policy was to ensure that financial advisers were made affordable and accessible – that was the original and guiding principle of financial services reform,” Conway said.
“In a way, for us as a professional body that became our guiding principle as well when it came to look at the regulation for both FOFA and then also the professional regulation on top of that.
“Will that lead to a better consumer outcome and moreover what do our members think and are we having that dialogue?”
Slattery said the financial planning and accounting sectors must work closely with their association bodies in order to achieve better outcomes.
“With the advent of limited licensing, we’re actually in a new superannuation world and it will be a new profession and will bring new opportunity,” she said.
“One of the reasons we’re working closely with the IPA is to bring vision for the future to seek opportunities and be proactive with joint policy settings with government for regulations in the future so that we’re not being [over-legislated].”