2020 was another year of M&A and regulatory shake-ups for the advice industry, with the added chaos of a once-in-a-century pandemic thrown in.
IOOF’s transformation of its advice business and purchase of MLC dominated the headlines as the most significant industry transaction of 2020, as the institution surprisingly doubled down on advice following the major banks’ exodus.
The wealth giant also embarked on a shake-up of the structure of its advice arm as it sought to better incorporate its dealer groups purchased from ANZ within the wider business, create clear high-net-worth and mid-market offerings and cull unprofitable advisers in a similar fashion to AMP in 2019.
AMP also continued to suffer from its share of scandals, with harassment allegations against AMP Capital chief executive Boe Pahari leading to his demotion and the resignation of the wealth giant’s chairman, David Murray.
At the same time, the looming compliance deadline for the FASEA exam weighed heavily on advisers’ minds in the first half of the year, with less than half of advisers on the register having passed as legislation to extend the timeline to 2022 was delayed because of the pandemic.
In a nail-biting parliamentary session in June, cross-benchers decided at the last minute to oppose the bill containing the extension because of unrelated amendments. Adviser associations lobbied hard over the course of the week-long sitting of parliament, resulting in the senators withdrawing their objections and the bill passing parliament.
The FPA also had more to say on advice regulation this year, releasing its policy paper calling for the simplification of the current licensing system to allow advisers to individually register through the forthcoming disciplinary body.
The proposal was largely welcomed by the industry, but rival associations and licensees raised concerns around how the logistics of the idea would work given the existing regulatory change advisers were already dealing with.
Of course, the pandemic had its own ripple effects on the advice industry over the course of the year. The particularly harsh second wave in Victoria meant that financial services businesses were banned from conducting on-site work, which led to additional regulatory relief being provided to local advisers around reporting and complaints handling obligations.
ASIC also announced that simple advice around the government’s early super release scheme would not require an SOA from advisers, but restrictions around the fees that could be charged for such advice meant that not many practitioners took up the relief.
The virus also had economic impacts on the industry, with advice technology provider CCUBE announcing it had entered administration, later being purchased by the fintech group OpenMarkets.
It’s hard to predict what 2021 will have in store, with slow but steady progress being made on the global rollout of the COVID vaccine, but one thing’s for certain: regulation will yet again be top of mind for advisers and licensees heading into the new year.
Stay tuned for our series on Advice in 2021 where some of the industry’s leading voices will share their thoughts on the important themes for the next 12 months, including scaled advice and the future of the code of ethics following the government’s abolition of FASEA.
On behalf of the ifa team, we wish you a safe, happy and prosperous new year.
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