Only the Tax Act trumps advice legislation for scale and complexity
Only the Tax Act outstrips the scale of the legislation and regulation being imposed on financial advisers.
That is amongst the feedback delivered to financial planning licensees by Government-appointed experts looking at the current settings of the financial advice regulatory regime and something which was underscored during Financial Newswire’s recent financial advice roundtable.
The Australian Law Reform Commission president, Justice Sarah Derrington commented to financial advice executives that the only legislative framework larger than that applying to financial advisers is the Tax Act.
AdviceIQ general manager, Paul Harding-Davis said that the judge and legal advisers looking at the regulatory regime surrounding advice had been staggered by the size and complexity of the financial advice rules and regulations.
“If a judge and the lawyers helping her find it hard to work their way towards an answer, then you know it must be messy and complicated,” he said.
Harding-Davis said that the advice industry rules needed simplification but, despite this, it had been subjected to the design and distribution obligations (DDO) which were stupid and meaningless and, in the end, would not see clients protected while adding around $300 in costs per client.
Fiducian executive chairman, Indy Singh also pointed to the increased work generated by the Australian Securities and Investments Commission’s (ASIC’s) new breach reporting regime which he said was seeing pure incidents looking like breaches.
“Its getting out of hand and once you have expanded breach reporting you’re going to have the cost of regulation going up, you’re going to have compliance costs going up, monitoring and, I presume the compensation scheme of last resort, as well,” he said.
Infocus Wealth Management chief executive, Darren Steinhardt said that he was hopeful the Australian Law Reform Commission review of financial services laws would see the pendulum swing back to the centre but agreed strenuously with Harding-Davis on the inappropriateness of the DDO regime.
“I think it [DDO] is some of the dumbest legislation I’ve ever seen,” he said. “It is absolutely ridiculous.”
Madison Wealth general manager, Jaime Johns also noted the degree to which Justice Derrington had expressed surprise at the legislative and regulatory burden being imposed on financial advisers and said that the issue was made even more complex by the “grey” regulatory approach adopted by the Australian Securities and Investments Commission.