How Canberra Broke Financial Advice: A Decade of Policy Failure
OPINION
Financial adviser and Financial Newswire contributor, Jarrad Gray, reflects on the frustration being felt by advisers as they find themselves still struggling to navigate a political and bureaucratic regulatory maze.
A decade ago, government set out to clean up financial advice. Scandals had rocked the banks, consumers were burned, and trust was in tatters. Reform was inevitable. What we got was FOFA—the Future of Financial Advice reforms—sold as a consumer-protection revolution. What followed, however, was a slow-motion collapse of a profession, a regulatory maze that rewards paperwork over people, and a system so dysfunctional that millions of Australians can no longer afford the advice they need.
FOFA was the first domino. Launched in 2013, it banned commissions and imposed a “best interests” duty – sound in theory. In practice, it buried advisers in layers of compliance. Opt-in notices, fee-disclosure statements, endless checklists – rules written for bank-aligned salesforces were forced on boutique firms. What began as protection turned into paralysis, and the cost of giving advice soared.
Then came FASEA—the education crusade that broke mid-career planners. Introduced in 2017 to professionalise the industry, it mandated degrees and ethics exams. Few opposed higher standards; most opposed the chaos. Deadlines shifted, rules were rewritten midstream, and guidance was late. Nothing exemplified this more than existing advisers with full Diploma’s in Financial Planning and years of practical experience, being told they were no longer qualified and only approved degrees would suffice – forced to then wait years to be told exactly what those qualifications were. Advisers nearing retirement faced thousands in study costs or an early exit. Many chose the latter. And just as the sector adjusted, FASEA was scrapped in 2022—its functions split between Treasury and ASIC, leaving a trust vacuum where certainty should be.
As advisers bled out, the bureaucracy piled on. After the Hayne Royal Commission, Canberra imposed annual fee consents in 2021. The goal—clarity for clients—turned into a compliance treadmill. Firms now chase signatures like debt collectors; miss one, and revenue stops cold. Clients pay more for the privilege, and anyone with a modest balance is effectively priced out.
And then came the so-called safety net: the Compensation Scheme of Last Resort. Launched in 2024, it promised to protect consumers left high and dry by failed firms. In reality, it slugged advisers with hefty levies to cover collapses they had nothing to do with. The funding model is structurally flawed: advisers—who don’t manufacture products or run managed funds—are underwriting losses from failures often tied to product issuers or operators. Worse, it’s a classic case of bad policy baked in so deeply it’s now politically toxic to unwind. Treasury knows it’s unfair, but unwinding it would mean admitting failure. So advisers wear it. Every year.
And the risk isn’t static—it’s escalating. The Shield & Guardian collapse has exposed how catastrophic this levy could become if claims spike. If future large-scale failures are included without fundamental reform, the levy could blow out to a level that makes staying in advice economically unviable for small firms. In other words, advisers are now carrying an open-ended liability for the next industry disaster—whether they had any role in it or not.
The numbers tell the truth politicians won’t. In 2018, Australia had almost 28,000 financial advisers. Today, there are barely 15,500—a 45% collapse in six years. This isn’t natural attrition; it’s policy-driven extinction. And when the education/experience transition period ends Dec 31 this year adviser numbers are expected to drop even further. Every lost adviser means thousands of Australians who now turn to Google, Facebook groups, or TikTok for guidance on retirement and investments.
And still, regulators and Treasury congratulate themselves on “raising standards.” They’ve confused activity with progress, compliance with competence. The result is a hollowed-out profession split in two: robo-advice and generic calculators for the masses; high-fee, full-service advice for the wealthy. Everyone else? They’re on their own.
If Canberra wants to fix this mess, it starts with honesty. FOFA needs rationalisation, not more bolt-ons. Education rules need stability and reasonableness, not a revolving door of policy tinkering. Fee-consent bureaucracy needs a digital, one-touch solution—not 30-page legal forms. And the CSLR must spread its funding burden to product manufacturers, not just advisers.
Australians deserve a system that works for them—not a regulatory experiment that looks good in press releases and fails in practice. Until then, financial advice will remain what it is today: a luxury good in a country that desperately needs it to be a basic service. If this is a nightmare for consumers, also spare a brief thought for Advisers who’ve had to live it.
Jarrad Gray is a financial adviser and the Director of Raven Capital Management
Pretty reasonable summary. You forgot the institutional hatred of advisers and utter incompetence of the keystone cop regulator, ASIC, the demonisation of advisers by union/industry funds using members money (breach of fiduciary duty by trustees or ‘only to benefit members’ lies) and the current proposal to LOWER education standards to below pre FASEA periods.
This is bureaucratic bungling of epic scale. Personally I can’t see a fix as the only fix would not be palatable to the bureaucratic fools who got us here.
The government should fund the board for the first 3 years. It will cost less than 20% of the money ASIC wastes. During this time advisers should pay the asic levy to the board to build the balance sheet. The levy should be halved.
Simples.
Only problem is as it reeks of common sense it won’t happen. More torture of advisers and lack of advice to Australians will continue while the bureaucratic muppets sit there on their public service bloated salaries and arses and continue to destroy things for everyone else.
i have zero hope it will get better.
Nice ideas, and pretty similar to other ideas I have seen posted from advisers. Of course if this was proposed we could do away with licensees. If you want to reduce the cost of advice, the whole licensing structure is a huge burdon. If you took the amount we pay in licensee fees we could easily fund a professional standards (and discipline) board and still fund the CSLR easily, at one Dixons fiasco per year if needed.
Greta points.
Re the , “It was written by choice and academics who have no clue”, I fully agree. And what a pity Jim Chalmers appointed the Choice CEO as an ASIC Commissioner.
Jim’s talk fest in Canberra spent million $$$$ and what will they do.
MANUFACTURE MORE RED TAPE.
Why is there no productivity ?
It’s YOU CANBERRA, Red Tape maniacs making more and more and more and more and more and more and more and more and more and more and more Red Freaking Tape.
Good article. I know many advisors planning their exit over the next few years if this mess does not get sorted out.
This is an excellent article which could be expanded into a PhD paper of how Canberra and a bunch of vested interests have delivered poor outcomes for advisers and consumers.
No other profession would tolerate this.
It has been and will continue to be a total joke.
Why would anyone want to be a financial adviser putting up with continual uncertainty and being treated incredibly poorly?
Makes me angry.
Thanks Terry – agree it really would make for a thesis on just how badly policy created in a vacuum can make a meal of an industry and stimulate so many poor but forseeable unintended consequences (unintended used loosely)
The thing that really annoys me is Canberra’s lack of contrition. They cannot accept that they’ve made any mistakes whatsoever.
Instead they flit and prance around in their echo chambers thinking they’ve done a great job.
Every small proposed change appears to turn into a fight, with a myriad of parasitic institutions having their opinion on the matter but offering zero evidence to support their position.
Just spend a few hours on LinkedIn, click in the comments of an advice related press release from Canberra and observe the mutual praise fest in the comments.
Thousands and thousands of hours over many years have been spent warning Canberra about the foreseeable consequences of their decision making, yet here we are.
If you want a great example of how bad it is under the surface, have a look at the S99FA debacle last year regarding fees being paid for financial advice from super.
The chicanery there was off the charts.
That was a totally appalling state of affairs and sign of things to come.
The issue, as it’s always been, is cited in the first line of the article – intervention from “the government.” Come on.. they don’t know what the hell they are doing even on a good day.
The industry is in desperate need of and is ready for self-regulation.
Who suffers more broadly from lack of public confidence when a representative goes rogue – the industry. After years of this torture and botched regulatory response, who is more motivated than ever to not have the industry suffer and for the government to not intervene – advisers.
FAAA, AIOFP and others – get to work on this, put a call out for nominees, mobilise an independent peer voted representative board – show Canberra “thanks, but we got this from here!”
Product manufacturers should 100% be on the hook as well. So much more can be done in this space but because ASIC is so under-resourced nothing is happening. In 2025, money should not be able to just disappear!
A very well written article. There are obviously a lot more points showing how politicians and their bureaucrats have destroyed the industry though, but then the article would become a book.
Thank you, Jarrad, for capturing what advisers have been living through. Reform was needed, but poor design and constant change have driven up costs, pushed out experienced advisers, and left many Australians priced out of advice.
Higher standards and consumer protection are vital, but they must be balanced with stability, workability, and fairness—especially around education rules, fee consent, and the CSLR levy. Until then, advisers will keep carrying the burden while consumers miss out on the guidance they need.