Speaking on our exclusive podcasts, Stephen Jones criticised the government for “monumentally mishandling” regulatory changes across the financial services industry and vowed to do better if Labor is elected to government.
The shadow financial services minister and shadow assistant treasurer gave a candid assessment of the financial services industry, labelling the poorly managed “tsunami of regulatory changes” as the main culprit for adviser exodus in Australia.
“There was a whole bunch of changes that were in play, there was a known timeline for it, not going back months or even years. Some of this stuff has been five, six years in the making, how a government could monumentally mishandle a bunch of this stuff is beyond belief, particularly a government that says it’s a good economic manager.
“It is just beyond belief the mess that they’ve created in this sector,” Mr Jones said.
Labor, he said, has a couple of things on the agenda to iron out the kinks.
“Firstly, we believe that the transition to a capital P, professional financial advice sector is in the best interests of consumers, but also in the best interest of the profession. So, 100 per cent on board for that project. It needs to be done properly.”
The government’s error, he said, is to think the profession is homogenous.
“Assuming that everybody who holds a financial service licence is providing one sort of financial advice, whether it’s life advice, risk advice, or whether it’s wealth management advice and trying to run everyone through a professional qualification that fits that particular view of what the industry looks like is just absurd,” he said.
“So, we think fixing the advice area is the great unfinished business in the financial services area. It absolutely needs attention.”
Observing the necessity for base level knowledge across the industry, Mr Jones noted the increasing need for advice specialisations.
“There is a core level of qualification that is needed, that is common to all of them, but there are also specialisations within the profession that need to be accounted for in the accreditation and licencing system.
“We want to fix that. That’s absolutely critical.”
He also vowed to push for a series of new business models but opposed the idea of tweaking the intra-fund advice regime to allow super funds to provide a broader range of advice to consumers.
“It has been pitched to me that the ‘silver bullet’ in all of this, the one big solution is to let all the big funds, whether they’re industry funds or retail funds or whatever, just change the intra-fund for advice rules, and that’ll fix everything. The funds can just get into the advice business. I am incredibly unattracted to that proposition.
“If we did that, it’d be like just setting the clock for the next Hayne Royal Commission with that sort of supercharged vertical integration model.”
Instead, Mr Jones said that Labor wants to work closely with advisers to reinvent the industry.
“Government sets the regulation and facilitates … but I think it’s up to the sector, the advisors, the professionals within to come up with the business models that provide consumers with what they want in a safe environment.”
For more information, tune into our podcast here.
READ MORE: Jones promises to clean up ‘Mickey Mouse job’ of advice education standards
Those (few) amongst us who have long memories, can relate the woes of recent years’s atrocious, counter-productive, consumer-disadvantaging regulations to the advent of (then named) ‘Award Superannuation’, commendably introduced by Paul Keating in 1988, but deliberately avoiding the use of financial advisers and insurance agents to market to employers. The predictable failure of take-up by employers resulted in the Super Guarantee Act in 1993. But then began the Industry Super anti-financial adviser campaign of ‘Compare the Pair’ – which continues today. This led, unavoidably, to the bad-mouthing and suspicion-generating questioning of the role and practices of financial advisers. And which, as we know all too well, became an irresistible political football for whichever political party happened to be in power. Hence the present seething morass of politicians, government agencies (particularly ASIC), ‘industry bodies’ and (inaptly-named) adviser bodies we have today. Of course, the victims – apart from vilified advisers – are inevitably the Australian public. Shame on the guilty! Too many self-interested cooks! Until we scrap the lot, the problem won’t go away.
Only a few years ago when FASEA was being debated this same party said changing Degree requirements and or delaying the implementation of FASEA would remove consumer protection mechanisms. They questioned why the Liberals were placing consumers at Risk. Based on past History we know ultimately it’s going to be AustralianSuper or Hesta that this guy will be taking orders from and I don’t want to take that risk.
Had a quick listen to the podcast and my takeaways were:
1. Labor think the Government has completely stuffed advice, but they won’t be changing the red tape side of things
2. Labor support financial advice becoming a profession, but he is also happy for older advisers to not have to do any further education
3. He thinks the industry should be split into Risk, Wealth and Stockbroking and everyone should have different education standards…………..but they still come under the same legislation……sorry but this bit was really unclear
3. He totally supports commissions for mortgage brokers but not for insurance
4. He doesn’t see vertical integration as being a problem (I suppose his Industry fund mates have told him to say that)
Great another politician who doesn’t get it but wants to try and sound good.
He fills me with zero confidence. If they’re not focused on fixing bad regulation/over-regulation/red tap then add them to the pile of idiots who don’t get it and don’t understand what they’re trying to fix.
Before the Royal Commission Report was handed down, Labor vowed quite vehemently to implement EVERY recommendation made by Hayne. Now they’re going about face ?
and Labor also opposed and blocked any adjustments to FASEA legislation. They called out the liberals saying they were watering down consumer protection mechanisms. Some sleazy double statements.
ALP still against commissions right?
Where was he when the legislation was introduced and passed? Now he’s going to fix it up?!?! Instead of arguing points he didn’t believe were in the interest of industry and consumer at the right time, he is claiming to now come through and clean up the mess. It’s easy to say the right things just before an election – I don’t trust any of them!!
Wasn’t Jones the advocate of bringing commissions on risk down to ZERO? I would not trust Jones as far as I could throw him.
Finally someone that sees things how they really are.
You cant be talking about Stephen Jones….
This is like watching a c grade horror movie unfold…
The Liberals stuff things up then Labor looking to get elected says they will magically fix everything?
Stephen Jones from Labor says “Government sets the regulation and facilitates … but I think it’s up to the sector, the advisors, the professionals within to come up with the business models that provide consumers with what they want in a safe environment.”
Guess what? We already have and no thanks to politicians we still have clients with most now paying us more and with many we can no longer afford to serve so that is the real story…
Any wonder why people don’t trust politicians?
Imagine Pollies actually giving a crap about Advisers, what a novel idea.
I am utter disgusted in the last 8 years of Frydenberg’s LNP Kill Advisers approahc.
However, Mr Jones / Labor, I havent seen you oppose any of these crazy BS mass over REGS the LNP have implemented, in fact you were pushing for more REGS I believe.
Canberra, Frydenberg, ASIC, AFCA, the whole lot of you are a disgrace.
The ALP and the Libs are basically scrambling now. They’ve both attacked the advice industry since FOFA but it does seem like the ALP is the lesser of two evils.