Call to keep consumer groups out of financial services law-making

Mike Taylor

Managing Editor and Publisher

5 December 2022

Consumer groups should be explicitly excluded from a suggested Rules Advisory Committee which would help shape financial services legislation, according to the Stockbrokers and Investment Advisers Association (SIAA).

The SIAA has told the Australian Law Reform Commission that while there is room for legal experts and industry groups to participate on such an Advisory Committee, it would have significant concerns about the inclusion of consumer groups.

In doing so, the SIAA pointed to the adverse impacts of consumer group influence in the past.

“We note the proposal is that the Rules Advisory Committee could comprise representatives of industry groups, consumer groups and legal experts such as practitioners and academics,” the SIAA submission said. “While we understand the importance of legal experts and industry groups being represented on the Rules Advisory Committee due to their technical and subject matter knowledge and expertise, we have significant concerns about the inclusion of consumer groups on such a body.”

“Consumer groups have had significant influence over the policies which have shaped the financial advice profession over the last two decades. While it may be appropriate for the consumer voice to be considered at the policy level (and consumer groups have had significant influence over the policies which have shaped the financial advice profession over the last two decades,” it said.

“One could argue to the detriment of both those providing and seeking financial advice), there is no benefit in including consumer groups on a body that is dealing with technical legal and drafting issues. We would recommend that consumer groups not be included on the Rules Advisory Committee for this reason.”

The SIAA said that it strongly supported the establishment of an independent Rules Advisory Committee because it would help avoid poor legislative outcomes.

“It is important that the proposed Rules Advisory Committee represents the entire financial services industry and does not apply the ‘one-size-fits-all approach’ that has created undesirable and unintended consequences for the stockbroking and investment advice sector,” the SIAA said.

“We have previously pointed out in our discussions with the Commission’s review team and in our submission on Interim Report A that one of the most egregious examples of a ‘one-size-fits-all’ approach to financial advice impacting the stockbroking and investment advice industry was the approach by the Financial Adviser Standards and Ethics Authority (FASEA) to the education standards and Code of Ethics (which were administered by FASEA until 1 January 2022).”

“FASEA’s lack of understanding about how stockbroking and investment advice differs from financial planning provided significant challenges to the stockbroking and investment advice profession and continues to do so while ever the Legislative Instruments developed by FASEA remain in place. It is an important example of the damage that can be done to an industry when those imposing standards upon it do not fully understand the way the industry works or take a narrow view that excludes sections of the industry.”