When asked at AIA’s Adviser Summit what the regulator should look to address as a priority in its affordable advice consultation, shadow financial services minister Stephen Jones said ASIC should “start by looking at some of their own guidance”.
“I’ve sat with advisers and they’ve shown me the volumes of forms they’ve got to provide just to deliver some basic advice to a client, and I have sympathy for the proposition they’ve put [forward],” Mr Jones said.
“A well-meaning set of legislative requirements can end up, when the regulator gets its hands on it and turns it into guidance, [creating] a burden that is not delivering the outcome the Parliament intended.”
Mr Jones said he was an advocate for simplifying advice regulation and ensuring “the arrangements [are] commensurate with the complexity of advice”.
“The burden should be proportionate to the risk involved,” he said.
“If something is basic advice we need to be able to find a way for a person to be able to access it. The burden should not be so overwhelming that a third of the cost of providing that advice is the regulatory cost of providing that advice.
“A lot of [what] advisers will raise with me is the stuff they are doing is red tape that provides no protection for the consumer. We’ve got to look at what we are doing at the moment – the difference between what is a guard rail or basically just red tape that adds no benefit.”
Mr Jones said there was an important role for advisers to play in helping to manage the money of the growing cohort of wealthy retirees in particular, and that neither robo nor intra-fund advice could sufficiently service the rising demand for professional advisory services.
“There’s a lot of talk about the role that automation and robo-advice is going to provide in this space. I’ve never seen a business being able to do it in a way to make a business model out of that – maybe that will come, but it’s not here yet,” he said.
“It would also be naive of us to think the problems exposed by Hayne and others in vertically integrated organisations couldn’t also exist in a not-for-profit fund. So, while [super funds] have a contribution to make, I don’t want us to set up something in the not–for–profit part of wealth management that duplicates all the problems that were exposed two years ago.”
Who is he talking about with these not for profit funds?
It’s not well meaning legislation. The legislation is actually the cause and blaming the bureaucracy is lazy. Fix the laws and resource ASIC to go after the criminals instead of drowning them in the nightmare that is the Corps act and then kicking them for making the regulation complex!
Before you pat this bloke on the back too much, realise he’s hellbent on getting rid of insurance commissions. He’s on record for years, as recently as this week, re-affirming this stance.
Well said
Take a good look at the reasons/details behind many of the banning orders issued to Advisers by the regulator. You’ll find many are for administration “issues” that have no impact on the outcomes for clients/consumers; pose no risk to consumers/clients; have no bearing on the strategies proposed by the Advisers; and make no sense to end someone’s career and possibly their life over. The answer isn’t to ban as many Advisers as possible, publicly naming & shaming in the process – the answer is to make rules where they benefit clients & outcomes – not just to create a level of complexity so advanced that it just keeps the regulators and their hundreds of staff employed for the sake of it.
If MIA Jane thought she could get away with doing nothing because “Labor would be worse”, Stephen Jones may have just awoken her from her slumber.
Jones has shown far greater understanding and empathy for the real problems of advice regulation than MIA Jane or her incompetent predecessor ever did. Sure, Jones may just be posturing for effect, but he certainly talks a much better game than Jane does.
LNP for last 8 years, Frydenberg, ODwyer and now Hume have been nothing short of utter disasters for Financial Advisers.
Here we have Jones from Labor actually talking sense.
Either LNP are deaf, dumb or promoting another bank owned Robo Advice agenda, direct to market agenda. They are purposely killing Advisers to help banks.
Time to go LNP, I will be voting Labor for the first time in my life and sending very strong letters and discussions of our political intentions to our businesses 450 clients to vote labor.
The LNP is costing these 450 clients over $100,000 pa in BS REGS and Red Tape costs that they keep increasing.
Out with LNP !!!!
Advisers and clients unite.
If the Reg is not benefiting the end customer, then the Reg is a failure. Not the advice sector. The longer this ‘state of regulation’ drags on the less accountable, understanding and greedy our regulators are, it is already in plain sight. Change should lead to simplicity. Simple stupid.
A lot of the red tape is solely due to the compliance departments of the larger AFSL’s imposing their own agenda on top of the regulatory requirements or compliance managers that don’t have the confidence or relevant industry knowledge to make a call in the advisers favour (for fear of repercussion) and instead default to a mind set whereby the file is simply failed with no reasonable basis. Having spent the last 4 years working in compliance for a big 4 bank I can attest to this.
Maybe but ASIC don’t even understand their own BS REGS.
They were asked to provide shorter, concise, compliant SoA templates.
They had 1 go in 2017 and failed miserably.
Since then BS Regs have continued to increase, now FARSEA, now 2nd tier AFSL checking at platform level, etc
ASIC are a complete basket case and have no idea how to unravel the BS REGS mess they have seen over.
Licensees have nothing to gain from persecuting their advisers. I am sick of this finger pointing at AFSL’s. The narrative was created by ASIC to deflect attention away from themselves. Licensees are simply reacting to ASIC’s extreme, draconian and unwarranted behaviour. To save themselves, the Licensees are throwing some advisers under the bus. It is very sad. But it is a desperate act of survival and I do not blame Licensees for it. Point the finger at the real culprit.
Today I am putting together advice for an existing (pay as you need me) client.
Advice is simple, and after they called me, it took me all of 6 minutes to determine the best course of action for them.
In addition to that 6 minutes, to do the job thoroughly, I’d spend an hour with them explaining what they really need to know, including all disclosures, and my office would spend maybe an hour implementing it all.
Roughly 2 hours, end to end.
So what am I charging? $3,300.
Because while 2 hours is all that is needed, with all the BS we need to do to satisfy our licensee and the regulator, this 2 hours will actually take us some 10 hours.
That’s an additional 8 hours this client pays for, for no benefit to them.
It’s also 8 hours that I now don’t have available to help other people who need guidance.
Tell me how the regulator has made advice “more accessible and affordable”…
Looks like a typical Labor response, criticise but dont supply a policy. How about Albanese actually puts forward a policy as I am sure if he did and it was more reasonable than what the LNP is doing to us then not doubt support would follow.
Please, Stephen, bring some sanity to the table and get your parliamentary peers to understand the turmoil our once great industry is in. If nothing changes in the next 12 months the mass exodus will continue and more clients will be “orphaned”!!!