A cohort of industry bodies has continued its efforts to enact change in the area of financial advice, with a joint submission to Treasury’s Quality of Advice Review calling for a greater focus on consumer outcomes, recognition of advisers as professionals and consistency in the introduction and application of regulations.
The Joint Associations Working Group (JAWG), made up of 12 bodies representing financial advisers, accountants and stockbrokers, said: “Existing regulatory requirements are confusing, complex and overwhelming and mandate a one-size-fits-all advice process that neither caters for, nor considers, the individual needs and circumstances of each consumer.
“This could be addressed by ensuring advice is less costly to produce and presented in a way that is meaningful and more easily understood by individual consumers, under a principles-based, consumer-focused regulatory framework that encourages professional judgment.”
In the submission, the JAWG stated accessible advice could be achieved through more regulatory certainty, streamlining regulation and advice policies, a greater use of scoped and limited advice, providing access to available data for advisers and moving to a principles-based approach to regulation.
The submission also noted that while the advice sector had moved to become more professional through the introduction of professional standards and the Future of Financial Advice and Life Insurance Framework reforms, government and regulators had not taken this view.
“Despite being seen by the vast majority of clients as trusted and valued professionals, and as demonstrated through the behavioural improvements seen by regulators … the government and regulators, until recently, appear to have taken the view that financial advice should remain a highly regulated environment that relies on black letter law, legislative instruments and regulatory guidelines,” it stated.
“This has led to a complex, inconsistent, costly and difficult-to-comply-with environment, with licensees and advisers being very fearful of making even the most minor error.”
The JAWG also called for specific actions to be taken, including altering the regulatory regime so it supports an advice process aligned to professional judgment and the situations of individual consumers, guided by professional standards combined with the removal of the safe harbour steps from the Corporations Act.
Additionally, the current professional standards and education requirements should be retained, but the one-size-fits-all education pathway should be reviewed in respect of current and potential advice specialisations and business models, it said.
It also called for the implementation of a profession-wide position on the tax deductibility of initial and ongoing advice fees and a review of the Australian Securities and Investments Commission industry funding model.
The JAWG consists of the Association of Financial Advisers, Boutique Financial Planning Principals Association, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Planning Association, Financial Services Council, Financial Services Institute of Australasia, Institute of Public Accountants, Licensee Leadership Forum, SMSF Association, Stockbrokers and Investment Advisers Association and The Advisers Association.
Most of the Associations have also made separate submissions addressing specific views and issues relevant to their members.
