Govt urged to consider deregulation to bring down costs
With regulatory reform, including the LIF reforms and adviser education, expected to cost the industry nearly $3 billion, the government should consider deregulating some areas, says Tria Investment Partners.
In its latest Trialogue article, the superannuation consulting firm said the amount of regulatory change over the past five years has been “unprecedented”, with some benefits yet to be realised.
Tria also estimated it will cost the financial services industry $2.93 billion to implement a number of regulatory initiatives, including the LIF and adviser education reforms.
To reduce those costs, the government should look at new ways to implement change, Tria said.
“It would be beneficial if we could work with government and the regulators on creating a more streamlined approach to regulatory change. And in some areas, even consider deregulation,” the article said.
“That would provide an opportunity for the industry to innovate and reduce costs to members. And that can make a big difference to member outcomes.”
According to research conducted by Tria Investment Partners for the FSC, the LIF reforms are expected to cost advisers $31 million and insurers $71 million.
Meanwhile, the adviser education reforms will cost advisers $131 million.
“On top of these implementation costs, there are also ongoing costs of compliance,” the article said. “The industry will incur a higher annual operating budget of $262 million per annum to satisfy ongoing compliance with these regulatory changes.”
While these changes are costly, some are necessary to improve the industry, according to Tria.
“Of course, many of these changes were necessary to continually improve practices in the financial services industry, and reflect the importance of managing Australians’ wealth,” the article stated.
“Looking forward, there’s little respite in sight – given the ongoing uncertainty of the last budget’s proposed changes to superannuation rules (not to mention the devil in the detail with any proposal), they are not even included in these calculations.
“That means one thing for certain, regulatory change will continue well into the future.”
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