Industry and govt must come together to address ‘overlapping and contradictory regulations’

The FPA has called for industry and government to come together to “address the quagmire that has been created by complex, overlapping and contradictory regulations, codes and rules that now govern the provision of financial advice”.

In its QAR submission to Treasury, the industry body has endorsed five key priorities which it says will improve the affordability and accessibility to quality financial advice:

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1. Recognising the professionalism of financial planners
2. Addressing the needs of clients including easier-to-understand documentation, with an “updated” disclosure and documentation framework
3. Achieving regulatory certainty
4. Improving sustainability of profession and practices
5. Facilitating open data and innovation

“Financial planners came into this profession to help Australians achieve their financial goals and have confidence in their future. They did not bargain on spending more time generating paperwork and filling out forms than helping their clients,” FPA CEO, Sarah Abood, said.

“Just one of many examples is ongoing fee disclosure requirements. While markets are shaky and inflation spiking, many planners are having to drop everything to get multiple sets of forms signed by their clients before 30th June to re-authorise their ongoing fees. These fees have already been disclosed and approved up to seven times in the past 12 months. It’s inconvenient and confusing for clients, it’s costly for planners, and it’s got to stop.

“We are calling out many other examples in our submission, of areas where the current regulatory settings are adding unnecessary cost and complexity to the financial advice process, at a detriment to consumers. It’s making advice harder to understand and more expensive than it should be for consumers, and it’s playing a role in the decisions of financial planners to leave the profession.”

As part of its push to recognise the professionalism of financial planners, the FPA has called for a simplified regulatory regime that recognises the professional status of advisers and planners, given they currently require tertiary qualifications to stay in the industry.

Specifically, it calls for the removal of Chapter 7 from the Corporations Act 2001.

“We need to eliminate duplication between the registration and professional standards for financial planners, and the authorisation and other financial advice obligations in the Act,” Ms Abood said.

“The current financial advice affordability issues cannot be fixed by more band-aid solutions.”

The FPA has also recommended that the Corporations Act 2001 removes the terms “financial product advice” as well as “general advice” which it suggests should be changed to “financial product information”.

“This will expand consumer protections to individuals receiving financial advice from those who are not currently required to meet the minimum education standards,” Ms Abood explained.

“To ensure such services can continue to be provided by appropriately qualified persons, education standards should be developed based on a framework of scalable competencies designed around core financial planning competencies and advice specialisations.”

The QAR is set to be released in December.