The Association of Financial Advisers (AFA) has urged the federal government to use the recently proposed adviser disciplinary body to simplify the financial advice industry.
In a 2021/22 budget submission focused heavily on the reduction of the complexity surrounding the provision of financial advice, the AFA called on the government to take full advantage of the opportunity to rationalise the financial advice regulatory framework as part of the winding up of the Financial Adviser Standards and Ethics Authority and the establishment of a single disciplinary body.
This follows the government’s announcement in October 2020 that the financial advice industry could expect legislation that would establish a new single disciplinary body for the sector to be introduced by mid-2021.
“We recommend to the government to fully leverage this single disciplinary body rationalisation opportunity to ensure that in this exercise the regulatory regime for financial advice is simplified and that the regulatory oversight cost is reduced and the fees paid by financial advisers can decline,” the AFA said.
“It is our view that this is an important immediate opportunity to consider a range of options to simplify financial advice and to remove non-value-adding activity and steps that have arisen over time due to regulatory overlap and excessive compliance standards.”
In addition, it recommended the government extend current tax deductions to include initial advice and the cost of advice on life insurance, noting access to tax deductions at the marginal tax rate would help reduce the cost of financial advice and make it more affordable for consumers.
“This deduction should not be seen as a revenue reduction to the government, but more an investment into creating awareness and encouraging Australians to take financial control of their own future, and in doing so reduce the short and long-term burden on the government,” it stated.
“We understand that the government might want to put a cap on this tax deduction for upfront advice as a control measure and we would support something that covers the majority of the mass market (ie, fees of up to $5000).”
It also called on the government to address the excessive increase in the Australian Securities and Investments Commission’s (ASIC) industry levy, in line with the Financial Planning Association of Australia’s recent budget submission, which highlighted the ASIC levy as a key concern.
Earlier this week, the SMSF Association called on the government to use the 2021/22 budget to reduce the complexity in the superannuation and retirement income system.
