Speaking as part of a panel discussion at AIA’s Adviser Summit on Tuesday, FPA chair Marisa Broome said the industry was in desperate need of regulatory simplification, and that steps taken by the government so far, while positive, were not adequate to turn the tide of adviser exits.
“Getting rid of FASEA isn’t changing the discussion – we need to keep challenging regulators to have the understanding that with the single disciplinary body all the way through to the law reform review of Chapter 7, we need some consistency rather than having to comply with different interpretations of rules that are out there,” Ms Broome said.
Bombora Advice managing director Wayne Handley agreed with Ms Broome’s comments, saying advisers were caught between a rock and a hard place given the strict regulations in place, coupled with rising demand for simple low-cost advice among consumers.
“ASIC aren’t satisfied, consumers aren’t satisfied, the associations aren’t satisfied – we’ve got ourselves to a difficult place,” Mr Handley said.
“To move to a scaled environment is very difficult with advisers having to serve consumers’ best interest needs. FASEA are saying something, ASIC are saying something else – it’s becoming extremely complex and providing advice is a difficult task.
“The opportunity for advice has never been better, so we need to ask ourselves the question why advisers are leaving at such a rate when there’s twice the opportunity.”
While Australian Unity general manager of advice Matt Brown suggested the sector was ripe for venture capital investment given the scale of disruption and increasing advice demand, Mr Handley said layers of complexity in the current regulatory framework were likely to scare away any serious investor.
“Whilst the opportunity is great if you’re an investor, one thing you look at is the complex nature and the regulatory environment in which you enter – ours is very complex and that will suffocate new investment in the industry,” Mr Handley said.
“We need some leadership at government level to realise the opportunity to turn this into a thriving profession. In five years’ time we could have a thriving sector providing employment to more people.”
Ms Broome echoed Mr Handley’s concerns that while regulations remained how they were, the advice industry would fail to attract significant investment.
“I think one of the reasons it’s not being developed is we have this compliance system that is not consistent with everything,” she said.
“As a VC I’d be reluctant because I can see how technology can make a difference to the way advice is provided, but the rules aren’t consistent, and until that gets worked out I don’t think I’d want to exist in that space.”
All the changes made it easy for Melissa Caddick to thrive while making it impossible for honest advisors to survive.
Love how ASIC & government come out and say they want to reduce costs for consumers. Next thing you know the government doubles the amount of CPD hours for the tax practitioners board, and annual renewal/opt-in for adviser fees. Who do they think is going to be paying for this?
As an example, how many Advisers on ASIC’s banned/disqualified register had tertiary qualifications vs how many didn’t? How many had completed their ADFS vs how many hadn’t? Are more pieces of paper the answer? No. Whether they’re theoretical qualifications that provide zero ability or knowledge to an Adviser in their normal course of duty to clients; or mountains of paper in the form of SoAs, RoAs, FDSes, Opt-Ins, File Notes, etc. Clients don’t want them, don’t benefit from them, and often don’t even want to see them – they certainly don’t want to pay for them. Advisers don’t want them, don’t benefit from them and don’t need them – especially an experienced Adviser who can sometimes know within minutes of chatting to a client how to best help them, but is then hampered by the ridiculous state of compliance that ASIC push for, and end up having to charge thousands of dollars to cover their time.
well written
this is a joke – the FPA whinged and complained and moaned and groaned about advisers and accountants since 2002 – now its too hard for them and they are still moaning and groaning…..totally **** !!
Self inflicted… pfft.
I don’t know how Marisa Broome can sleep at night and certainly the FPA being puppets of large insto’s have contributed to this industry having 9 regulatory bodies. The FPA under her leadership sold advisers down the drain during the CBA advice scandal in return for compulsory membership. The only chance we had at self regulation was lost during the Royal Commission when the FPA CEO fronted, leading to the Commissioner stating industry associations are incapable of being a FASEA code monitoring body. The FPA have made zero changes. They are even unwilling to discuss these matters privately. If the FPA was serious Marisa and Dante would have stepped down and they would have ended the Professional Partner Program.
What a multibillion dollar waste of time, when you take into account all the man hours spent across the nation not only in implementing but also debating and attempting to understand it all over the last few years.
All because we have an inept corrupt regulator with a political agenda and the Gov put too much store in a doddery old naive gullible unsuitably qualified Royal Commissioner, Haynes, who believed them and then positioned his findings around their falsities.
Yes, we needed intervention and pruning to clean up issues, but unfortunately instead of a sharp eye surveying it all and trimming evenly all the plants in the hedge called ‘financial services’, the dodderer was led by the hand by ASIC to leave some completely untouched (union industry funds) and severely hack at root level several others, making a complete mess and questionable whether some will survive.
I wonder if Hayne was the recipient of some paid for by asic “consumer ” submissions suggesting putting annual agreements into recommendations for example? It really makes you wonder when people are paid for submissions, it really should be illegal
well said
ASIC massively increase BS REGS amd Red Tape costs over 20 years.
ASIC then ask why is Advice so expensive and difficult, you only have 9 conflicting Regulator to answer too.
Advisers provide masses of submissions with Real Adviser concerns and options.
I will bet you what ever you want ASIC say bad luck, it’s a necessary Regulatory environment.
ASIC will do NOTHING to accept any responsibility of the mess they have made.
ASIC will do the only thing they know how to do and that is dump more Regs and more Regs on Advice.
ASIC have zero idea of real Advice.
THE ONLY SOLUTION IS ADVISERS REFUSE TO PAY ASIC LEVIES, TOTAL ADVISER PROTEST AND WATCH THEN TRY TO SHUT THE WHOLE INDUSTRY DOWN.
Nothing else will be listened to by these Canberra bubble morons.
If the profession is being guided by the lawyers, and it is at every level, why are we surprised that we have an exorbitant amount of red tape? No amount of red tape is going to prevent sharks operating unscrupulously. Make things simpler and cost effective for clients who have advice needs and are prepared to pay a fair/commercial fee. It is time to have a simple approach that allows all parties to thrive. The profession needs to work closely with government and leave the lawyers out of the discussion until the very end.
Let’s sing a rainbow too
While all the panel comments are valid, they focus on the impact of regulatory complexity on advisers and potential advice industry investors.
The bigger and far more important issue is the impact of regulatory complexity on consumers. Regulations are ultimately supposed to make things better for consumers, but the current environment is making things much, much, worse.
Professional advice has become too complex and expensive for most consumers to access. Consequently consumers are being increasingly drawn into dodgy unregulated products and services, which ASIC and co seem to completely ignore. This is a consumer protection disaster, which is just getting worse. It has been caused by regulatory (and regulator) failure.