QAR reviewer Michelle Levy “absolutely” agrees that the local financial advice industry has been subject to a perceived “overregulation” in recent years.
Appearing on a new episode of the ifa Show podcast ahead of the QAR release set for December, Ms Levy addressed industry concerns about regulation and compliance, which also dominated submissions put forward by local groups in recent months.
“So when you say: ‘Some would say overregulation’, I would be one of those people. I’ve been a bit of a critic of the regime for a long time,” Ms Levy said.
“I think it has accumulated over time, and it doesn’t fit together very well. And I have worked with clients who are really struggling with it. I’ve seen the way the ASIC has tried to grapple with it. It isn’t working well for anybody.
“So coming into it when I was first approached about doing it, I was excited because I thought I’ve got all these ideas that had been rattling around my head for a long time, about how things could be improved.”
Ms Levy argued that “tinkering” with some of the reforms won’t make much of a difference and instead said that “quite significant changes” will need to be made to how financial advice and the provision of advice are regulated.
Adding to this, the Allens partner suggested that the current government is “acutely aware” of the issue that consumers need access to financial advice.
“I don’t think it is a matter of just crossing a few things out,” Ms Levy said.
“Now, is that realistic? I am hopeful that it is.”
She continued: “So I think there’s sort of momentum there, I think, to generate some change … so where I have got to is I think that there are some quite big changes that can be affected quite simply in the law, which I am hopeful will make it easier for people to get advice.
“And the way you do that is by making it easier for different people to give advice.”
Listen to the full podcast with Ms Levy here.
Ms Levy’s appearance on the ifa Show comes after an appearance by the Association of Financial Advisers (AFA) chief executive Phil Anderson earlier this month, who said that the QAR must look at the “significant layers of bureaucracy” forced on the advice sector in recent years.
Mr Anderson said it doesn’t surprise him that many of the QAR submissions issued to Treasury have recommended the regulatory burden placed on planners be reviewed.
“When you think about it, we’ve had such a period of vigorous, almost constant regulatory reform that is just built over the top of each other,” Mr Anderson said.
“So we’ve had the FOFA reforms, we’ve had the LIF reforms, we’ve had professional standards. We’ve had all the recommendations out of the royal commission. On top of that, you’ve had DDO and a range of other reforms. It’s all just one layer on top of the other layer.”
oh great another round of new legislation can’t wait. Just leave us alone and go fix some other sector.
Sadly, the submissions by the Industry super funds, Insurance companies and the Joint submission will hold the most influence. What does this mean:
1. Nothing will be done to separate advice from products (not surprising given none of those mentioned above think this is a problem)
2. There will be more scope for product providers to provide “scaled advice”. We all know this is not advice, it is just an easier way for these companies to have people invest in their own products. Scaled advice misses the bit where non-aligned advisers would say I know you want to invest in this fund/shares, but I think you are better putting more money into super (or vica versa)
3. Red tape for registered advisers will still be through the roof and we will need to spend most of our time writing SOAs that clients don’t really want
4. I will make the transition to be a money coach!
So, Anthony Albanese launches a full investigation and Royal Commission into the Robo Debt debacle at a massive cost to the public and has stated that very sadly ” people lost their lives” in relation to this matter.
This is of course, very sad indeed.
Well, after a decade of misguided & discriminatory regulation, persecution and targeted attack and an overwhelmingly aggressive regulator provided with unending powers and funding, what about the Labor Govt launch a Royal Commission into the treatment that has been dealt out to Financial Advisers over the last decade and why it sadly drove 30 plus advisers to take their own lives because they could no longer see a clear way out or any future.?
The mental health impact that has been forced upon many good people who are dedicated, trustworthy and ethical and have the trust of their clients has been staggering.
…….and in many many ways, the Liberal Govt effectively sat on its hands and just let the machine gun continue firing.
Morrison, Frydenberg, Hume and O’Dwyer had no empathy whatsoever for the savaging of peoples self esteem, self confidence and self worth.
But advisers and the advice Industry does not buy any votes, opinion polls or assist with growing the Treasury coffers, hence the mental health impact and the financial destruction of advisers and advice practices is sadly not on any Govt. or public agenda, and probably never will be based on this recent podcast.
once voice, one professional association would have helped keep the message on track. The ego’s of the industry (who aren’t practitioners) were caught up in their own bubble so we still have this problem.
I listened to the podcast carefully. A number of comments stood out. 1. It is not the QAR’s role to make life easier for financial advisers. 2. It is about making advice easier for people to obtain. 3. To achieve point 2 they are going to allow “others” to provide financial advice without the regulatory burden. 3 Others is industry Super Funds, bank staff and probably accountants and lawyers. 4. If a client has substantial money and complexity they can pay to see a regulated professional adviser. 5. The advice industry will be a multi layered industry with many areas of the financial system being able to provide advice. What can you take from that? Reading between the lines they are going to allow Industry Super Funds to provide minimally regulated conflicted full scope financial advice. The other ‘others” will be allowed to provide limited financial advice without the regulatory requirements to provide an SOA or meet a best interest duty. Financial advisers will remain highly regulated and subject to the high cost of meeting the regulatory overreach so we can be thought of as professional advisers. So the financial advice industry has been regulated to death to remove the conflicts of interest but now Industry Super Funds will be allowed to provide conflicted advice with a reduced regulatory burden compared to a “Professional Financial Adviser”. That’s the conclusion I come to from listening to the podcast. Be happy if someone can prove me wrong.
Sadly your conclusions seem very accurate.
I’m pretty sure December 2023 will see the death of Financial Planning. Yes you are 100% spot on. She is on the same page as the incumbent Labour Minister Stephen Jones. He made similar comments stating that Financial Planning will be for the ultra hi net worth and could not see why the best interest obligation should be changed. Financial Planning will clearly remain highly regulated, and ultimately dwindle again. “other channels ” (social media, Super Funds) would be for the rest of Australia with regulation being relaxed making it affordable for people to seek advice from their super funds and a wide scope. With a smaller number of actual planners ASIC can better police and Super funds with big compensating pockets will be the domain of 90% of Australians.
So after 20 years of ever increasing BS compliance and REGS, 10 years of full on Govt / Regulators killing Advisers and now Michelle will just open up Advice from anyone that wants to give it ?
If Michelle honestly believes that ASIC’s own overly paternalistic Interpretations of laws via hundreds of REG Guides, AFCA making up their own kangaroo court legal rules to blame Advisers for any complaint and now FARSEA’s catch all Codes aren’t really a huge part of the problem – she is either completely ignorant, overly nice to Regulators or just telling lies.
“making it easier for different people to give advice”? Yet again confirming our worst fears…No surprise really. Levy makes her money selling legal advice to the big institutions. She will give her customers what they want.
If we were serious about regulation wouldnt we be removing the AFSLs of the big players that had multi billion dollar remediation bills?
“Perceived” overregulation ??????? I’m pretty certain it’s a bit more than perceived.
Its interesting to recall that Josh Frydenberg’s first job when he entered parliament was to remove red tape.
And in his farewell speech said he was proud of what he had achieve with Superannuation – I guess he is referring to the massive increase in FUM for Industry Super and almost total elimination of all competition.
That dangerous comment (second time) about “making it easier for ‘different people’ to give advice” has many of us pausing I’m sure. It sounds mostly nice but we have been here before.
Based on every word that has come out of this lawyer’s mouth the only people who should be hopeful are product providers. Especially the current government mates, the union funds, who are going to get more carve outs to give advice. It is clear the mess that was created by another bunch of lawyers is too hard to fix, and if you a licensed adviser you can look forward to nothing.
I too am skeptical, but any reduction in red tape is still a plus. That said, I agree that the agenda is likely for the benefit of your implied beneficiaries. But fingers crossed, as the paperwork burden for providing advice is over the top.
What would be good is a less onerous burden for keeping D and C clients on an agreement and a reduction in the requirements for providing advice (To help reduce the associated cost). Being able to get the cost of advice down is important, as mum and dad clients simply can’t afford $8K – $10K for advice in the first year.