There’s unlikely to be any reduction in adviser regulation from ASIC anytime soon as they are not immune to public opinion and its pressures, says former treasurer Peter Costello.
Speaking at the FPA Congress in Sydney on Wednesday, Mr Costello told the audience of mainly financial planners that if public opinion turns against them in some way, regulators such as ASIC are going to feel they have to do something.
"Regulators are not immune to public opinion," Mr Costello said. "They will do something, and the regulatory response might be way over the top, so it's better sometimes to deal with these things early and get them out of the way."
Mr Costello said he wishes Australia had regulators that were totally immune to public opinion, but we don't because we're operating in a democracy.
"They read newspapers. They're under pressure from parliamentarians. They're under pressure from the parliamentarians' constituents," he said.
"If something's gone wrong, people are going to say, and legitimately say, what were the regulators doing. And you know what they're going to do, they're going to try and then look for some heads."
Because no one is feeling under any need to reduce regulation, Mr Costello predicts there's unlikely to be any reduction in regulation from bodies like ASIC any time soon.
"Probably not in your lifetimes," he said. "Because they're under pressure. Parliament feels under pressure. Everybody feels under pressure, and so people say you've got to act.
"So what does a Parliament do? The Parliament's got to act and the Parliament passes laws. It might be bad laws. It might not change anything, but at least they've done something, right? This is the way the world works.
"I don't think it's good on them. I'm not saying it's a great system. You know me, I tried to simplify taxation on superannuation. I think I got it right. How long did it last? Not long. It changed."
As a result, Mr Costello said advisers are unfortunately going to have to live with this, which is going to be more costly for both the adviser and their clients.
"Which is going to be ultimately more costly for society, which is really just a demonstration of how when trust goes, costs rise, unfortunately," he said.
Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.
You can contact him on [email protected].
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