The current complexities in the regulation the financial advice system have created a crisis of confidence among advisers wanting to provide scaled or limited advice, an industry expert has said.
Pointing to industry regulatory guides and consultation papers exploring the provision of scaled advice, BT Financial Group head of financial literacy and advocacy Bryan Ashenden said research indicated the main factor standing in the way of SMSF advice being scaled was a lack of confidence among advisers about what the repercussions might be as a result of providing such advice to consumers.
As the regulatory framework currently stood, advisers could not be sure they would not have clients raising a complaint against them in the future as a result of the advice they had received and were concerned about potential consequences from licensees and regulators, Ashenden noted.
“The issue I think we have here is there is nothing that says we can’t [provide scaled advice], so the question has to be, why don’t we?” he said today during the virtual SMSF Association National Conference 2021.
“I think there is no doubt that there is a bit of a confidence issue that sits here. It’s not ‘I don’t know if I could provide scaled advice or not’, but ‘I know I can do it, but I just want to have the confidence that somebody’s not going to come back at me afterward’. I think that’s a big issue that we need to address.”
He noted the Australian Securities and Investments Commission’s (ASIC) recent “Consultation Paper 332 Promoting access to affordable advice for consumers” was a promising step towards building the necessary confidence among advisers.
“The important bit out of this consultation paper is that we are seeing a willingness from the regulator to work out how do we reduce these barriers,” he said.
“We’ve heard from the government that they want to look at ways to try and reduce some of the complexity that gets in the way of being able to effectively provide advice in a cost-effective manner through to clients. I do think that we are all on the right path.”
ASIC began consultation on the provision of affordable and limited financial advice in November and ASIC commissioner Danielle Press told the conference cost, complexity and over-compliance were key points of concern from the advice sector.
