The federal government has admitted the imposition of the education and professional standards regime by the Financial Adviser Standards and Ethics Authority (FASEA) did little to push down the costs of advice or make it more accessible to consumers.
Superannuation, Financial Services and the Digital Economy Minister Jane Hume made the admission during a presentation to the Financial Services Council Life Insurance Summit in Sydney today while speaking about the need for access to affordable advice.
“Access to good-quality, affordable advice is key to a well-functioning market for financial services,” Senator Hume said.
“Consumers need to have means through which to navigate complex financial products and incorporate them in their increasingly complex financial lives.”
The Minister noted that as consumers sought advice, advisers would have an “important professional role” in their lives and this meant they had to meet the professional standards promulgated by FASEA.
“FASEA was established in order to implement standards, including education requirements, a code of ethics, a program of continuing professional development and an exam that represents a common benchmark across the industry,” she said.
She added the authority “only focused on one piece of the puzzle”, which was creating standards and lifting the quality of advisers.
“They did not focus on keeping the cost of doing business low or making financial advice readily accessible to consumers,” she noted.
“Imposing red tape on advisers increases costs and takes time away from doing their job. For small businesses, this problem is even more acute,” she added, noting 90 per cent of financial advisers are sole traders or work within a small business.
She said the government was still committed to the ongoing professionalism of the advice sector, but wanted to maintain a balanced approach, which it could achieve through “regulatory alignment”, and pointed to plans to move the functions of FASEA into ASIC and Treasury.
The exposure draft legislation for these plans was released earlier this week and includes the creation of a single disciplinary body for advisers, an annual registration model for advisers and the retention of education and exam standards introduced by FASEA.
