The advice regulatory pendulum has moved too far says AMP
The Financial Services Council (FSC) financial advice white paper hit the nail on the head with respect reworking the financial advice regulatory environment, according to AMP Advice managing director, Matt Lawler.
In an analysis published this week, Lawler has also suggested that upcoming Treasury Quality of Advice review represents an opportunity for the Government and the regulators to “admit that in some areas they’ve gone too far and make considered decisions to wind back some requirements”.
He said the Quality of Advice review would be a critical moment for the financial advice industry and presented an opportunity to reset the course for how financial advicer is regulated and how it is delivered.
“Australia requires a thriving community of highly professional and trusted advisers. Yet adviser numbers have continued to fall, not just because of the additional qualifications, increasing standards and greater scrutiny, but also because with such a complicated and regulated advice process, the economics are increasingly hard to justify,” Lawler said.
“It is in all our interests to have laws that protect and benefit consumers, and promote a service-focused, professional and accountable financial advice profession. The flip side, however, is the cost of providing advice has risen significantly and, so too, the cost for Australians to receive advice, meaning fewer are actually benefitting from it. The pendulum has swung too far!”
“Many advisers have shown great resilience in sticking with the profession. They’ve continued to support their clients and communities through COVID, while managing enormous disruption and change for themselves and their businesses.”
“Advisers have signed up for additional education requirements, a new set of professional standards, they have accepted the decisions of the independent arbitrator AFCA, they are, as of this month, under the scrutiny of enhanced breach reporting requirements and from next year they will answer to a single disciplinary body for financial advisers. Despite doing some major heavy lifting to sign on for robust compliance and professional standards, the delivery of advice itself remains complicated – and laden with paperwork.”
“The Quality of Advice review is our opportunity to collectively implement constructive and positive change and to solve for these issues. The Financial Services Council hit the nail on the head with its White Paper, which calls for ‘best interest duty’ to not just be about ticking compliance boxes, recommends a re-work of confusing advice categories and an overhaul of the complex statement of advice process, which has long been a sticking point for advisers.”
“With the standards setting function of FASEA moving to Treasury, there’s also an opportunity to ensure the standards for advisers are fit for purpose, and where necessary make changes, maybe even admit that in some areas they’ve gone too far and make considered decisions to wind back some requirements.”