The Financial Planning Association of Australia (FPA) has announced its platform ahead of the next federal election, outlining several issues that it believes must be addressed by the 47th Australian Parliament to ensure certainty for the financial planning profession.
Key outstanding issues, according to the FPA, include ASIC’s industry funding model and education standards, the creation of a Compensation Scheme of Last Resort (CSLR) and further regulation of ‘finfluencers’, as well as the introduction of tax deductions for the provision of financial advice.
“We look forward to working with parties and stakeholders on policies and initiatives that contribute to affordable financial advice for all Australians and a sustainable financial planning profession for the future,” says FPA chief executive Sarah Abood.
The creation of a CSLR is “high priority”, the chief executive said. The professional body wants its design and implementation to meet the full range of matters considered by AFCA, including managed investment schemes.
The FPA has also advocated for the close monitoring of administration costs of a CSLR to ensure that cost recovery from industry doesn’t end up redirected to bureaucracy and administration.
The Senate economics legislation committee recommended the passage of the CSLR in February, however, with the government now in caretaker mode, it will need to wait until after May’s federal election.
The advice industry is fairly united on the cruciality of a CSLR, with the Advisers Association’s (TAA) chief executive doubling down on his concerns with the regulation earlier this month.
“The stalled legislation should give whatever party comes to power after the federal election pause for thought,” Neil Macdonald said at the time.
Reforms to education leave industry in limbo
Education has been a particularly sore point for advisers of late, with Ms Abood noting that the profession has essentially been left in limbo when it comes to assessing the education requirements they must meet.
“After a flurry of proposals and announcements over the Christmas-New Year break, financial planners who had not yet completed their education under the current requirements have been left uncertain as to what to do,” Ms Abood stressed.
“We’re calling for both major parties to consult with the profession and clarify the detail as to how any changes to current education requirements would be finalised and implemented.”
The FPA has also strongly advocated for the consideration of experience as a very important factor in the competence and skill of a financial adviser to provide professional services to their clients.
Improving advice affordability and accessibility
The FPA sees great merit in “sensible measures” to improve the affordability and accessibility of financial advice.
To this end, the body has proposed a reduction in regulatory complexity and duplication, as well as tax deductions for Australians accessing financial advice regardless of the stage in the advice process.
Also on the consumer front, the FPA has taken aim at the apparent “two-tier” approach to advice regulation and has requesting regulators take more action on ‘finfluencers’ to safeguard Australians.
“Whilst financial planners are subject to a high degree of oversight and regulation, and consumers can have confidence in the advice they receive from a professionally qualified and registered financial planner, none of these protections apply where ‘finfluencers’ are concerned,” the FPA’s election platform reads.
Conceding that ‘finfluencers’ can play a role in improving financial literacy and confidence among consumers, the FPA argued that that “they are not legally able to give personal or general advice on financial products, and anyone acting on a recommendation from this source is essentially on their own if things go wrong”.
Funding revamp required
Moving on to ASIC and Treasury’s review of the regulator’s industry funding model, the FPA has urged the next government to report their findings before the freeze on ASIC levies charged for personal advice to retail clients expires.
ASIC levies charged for personal advice to retail clients were previously frozen at their 2018-19 level of $1,142 per advice for two years.
Having earlier welcomed the freeze, the FPA has now argued that the Treasury needs to deliver its verdict before the freeze runs out, especially given the contribution “ever changing regulatory regimes and escalating regulatory costs” have on the cost of financial advice.
Overall, Ms Abood said that the FPA’s election platform is confined to matters on which it believes require executive and legislative action during the next Parliament.
“We acknowledge and support the ongoing review of financial services laws and regulation by the Australian Law Reform Commission, and are engaging constructively in this process,” Ms Abood said.
“Likewise, we welcome the commencement of the Quality of Advice Review led by Ms Michelle Levy and supported by the Treasury.
“A number of matters of great importance to our profession will be addressed through these important evaluations and we welcome the current bipartisan approach and support for their delivery,” she added.
The quietly softly approach hasn’t worked and the FPA is now basically irrelevant.
The FPA has some good policy ideas and some capable hardworking people presenting them to politicians. But politicians from all sides just keep ignoring them. [b]Because the FPA has no credibility![/b] The FPA needs to reform itself first before wasting time and money trying to reform financial services regulation. The FPA must, without delay:
– Stop all corporate memberships and bulk payment of fees by corporates
– Restrict individual membership to practising financial planners only
– Rescind all “grandfathered” CFPs.
– Restrict Board membership to real CFPs only
Only then will they have sufficient credibility to be taken seriously by politicians and regulators.
The Financial PlannING Association appears to now be advocating for the interests of financial planners so more like a Financial PlannERS Association? What a shame this didn’t happen under Dante’s watch…
FPA – where are you – do you still exist? – Why do I need to do an ethics subject when I did CFP 1 ethics and passed – couldn’t you go into bat for members who have this fake qualification CFP that isn’t required anymore
The FPA shouldn’t be asking – it should be demanding
What about opt in & consent Forms
For example if you charge a client who has multiple investments where you charge a fee why to you require to use their prescribed forms, there are cases where a client requires multiple fee consent forms, should be able to use a generic fee consent form so client only needs to sign one from only.
Also why do you need to lodge them which each institution , the adviser should have ability to provide acknowledgement they have consent form
If you provide a client with service agreement which stipulates a fee & services why should you also need to provide a FDS should be one or the other
These are unnecessary duplication added to costs for what purpose, you either have a agreed service agreement, or if you don’t than provide a FDS , the FDS though it intention mean well, but it unnecessary if you have a service agreement
How many times to you need to tel a client what you are charging & services proved over than next 12 month ie 3 times ridiculous
Just want to service my clients be upfront and assistant with meeting the goals & objectives
CUT down the red tape & cost
OK, so the FPA sends an email to the new Government – Government says no.
FPA – what’s your next step? Wait for another election and collect your salaries? Not much different to now is it?
All good initiatives. 5 more critical issues missed though on the list of urgent fixes needed to help alleviate cost of advice.
1) fee disclosure legislation is a unmitigated disaster. It fails to inform clients due to amount of paperwork much duplicated that they can’t understand and it adds enormous cost
To prepare and follow up
2) licensed advisers should be exempt from unnecessary DDO obligations (I’d argue AML is a also overkill when added to existing know your client obligations) cost benefit analysis needed
3) overly prescriptive advice documentation. Less soas, more flexibility with existing clients making changes, paperwork driven by overly client friendly afca determinations, scaring licensees and Pi insurers all needs reviewing
4) cost to provide PI year sitting with small businesses with no guarantee of a return in investment.
5) insurance is a social good and it’s been destroyed by impractical regulation. Cost of advice is more than consumer can afford without enough commission (or government?!!) subsidy
Do these guys have members still?
Would have been nice if the FPA was actually proactive in the first place and fought hard to never allow it to get this bad in the first place!
they are out there now so show support..
Won’t happen anytime soon.