The federal government and corporate regulator need to move away from a single-model approach to financial advice that forces consumers into advice models that do not suit them, according to an industry body.
The Stockbrokers and Financial Advisers Association (SAFAA) made the call for the government and Australian Securities and Investments Commission (ASIC) to consider new approaches to the provision of personal advice to retail clients on the day the consultation period closed for feedback on a recently released ASIC paper examining the subject.
“Consumers want different advice for different needs and the regulatory environment needs to accommodate consumer preferences and requirements and not seek to shoehorn all consumers into one advice service,” SAFAA chief executive Judith Fox said.
“The current complex and volatile market conditions highlight the importance of accessible and affordable financial advice.”
Fox pointed out ASIC’s own research found many consumers preferred limited advice, but the regulator’s inconsistent approach to that type of advice had become a barrier to its delivery to retail clients.
“ASIC’s regulatory guidance supporting scaled advice does not match reports it issues to licensees recommending full fact finds before providing advice,” Fox said, noting standard six of the Financial Adviser Standards and Ethics Authority’s code of ethics also requires full fact finds that conflict with the law permitting scaled advice.
“While SAFAA does not consider that changes need to be made to the law concerning limited or scaled advice, it is of the view that ASIC should reconsider its conflicting views on limited advice and ensure its reports to licensees are consistent with the provision of limited advice.”
Late last week, the advice sector was urged to make its voice heard on the issue by Superannuation, Financial Services and the Digital Economy Minister Jane Hume, who noted the importance of access to advice had been underlined by COVID-19 and recognised in the Retirement Income Review.
“The government is focused on supporting the advice industry with fit-for-purpose regulation, while maintaining consumer protections. We know that some interpretations of current regulatory settings are creating barriers to consumers seeking good-quality, affordable personal advice,” Hume said.
“The government supports a well-regulated and vibrant financial advice sector that supports advisers seeking to help Australians make informed decisions about their personal finances and to make better use of their savings in retirement.”
The consultation period for the paper, which commenced in November, closed today.