AFA calls for regulatory revamp on advice

The Association of Financial Advisers (AFA) has canvassed the possibility of rationalising the financial adviser professional year as a key measure in encouraging new entrants to the industry.

In a submission filed with Treasury’s Quality of Advice Review, the AFA has said one of the greatest challenges confronting the profession is a lack of new entrants.

“There are a range of factors including the perceived reputation of the financial advice profession, the education standard, the availability of courses and the appetite of practices to employ new entrants and put them through the Professional Year,” the submission said.

“We would like to see this issue carefully analysed to assess what more could be done, including potentially through rationalisation of the Professional Year requirements or through Government support of new advisers (akin to apprenticeship programs),” it said.

Elsewhere in its submission, the AFA said it strongly advocated for an overhaul of the regulatory and legislative frameworks governing the delivery of financial advice in Australia to ensure meaningful change.

“We concede that the QAR will ultimately need to be limited in its scope, timeframe, and deliverables. Notwithstanding these limitations, we recommend that any changes to the legislative and regulatory framework, because of the QAR, consider a risk based regulatory and legislative response,” it said.

“The services and advice that a financial adviser may provide ought to be listed, alongside the various risks and consumer detriment that may arise from each activity, ensuring that the compliance framework that governs the activity is proportionate to the risks that may ensue. This approach will ensure that compliance is targeted at high-risk advice and services, which may cause significant consumer detriment.”

“This ought to reduce the red tape that may apply to other lower risk services and advice which struggle under the weight of the regime that sits across the entire spectrum of advice and services,” the submission said.