The scrapping of FASEA does not go far enough when it comes to reducing the regulatory burden on advisers and making the sector a viable environment from investment and job growth, according to a panel of industry leaders.
Speaking as part of a panel discussion at AIA’s Adviser Summit on Tuesday, FPA chair Marisa Broome said the industry was in desperate need of regulatory simplification, and that steps taken by the government so far, while positive, were not adequate to turn the tide of adviser exits.
“Getting rid of FASEA isn’t changing the discussion – we need to keep challenging regulators to have the understanding that with the single disciplinary body all the way through to the law reform review of Chapter 7, we need some consistency rather than having to comply with different interpretations of rules that are out there,” Ms Broome said.
Bombora Advice managing director Wayne Handley agreed with Ms Broome’s comments, saying advisers were caught between a rock and a hard place given the strict regulations in place, coupled with rising demand for simple low-cost advice among consumers.
“ASIC aren’t satisfied, consumers aren’t satisfied, the associations aren’t satisfied - we’ve got ourselves to a difficult place,” Mr Handley said.
“To move to a scaled environment is very difficult with advisers having to serve consumers’ best interest needs. FASEA are saying something, ASIC are saying something else – it’s becoming extremely complex and providing advice is a difficult task.
“The opportunity for advice has never been better, so we need to ask ourselves the question why advisers are leaving at such a rate when there’s twice the opportunity.”
While Australian Unity general manager of advice Matt Brown suggested the sector was ripe for venture capital investment given the scale of disruption and increasing advice demand, Mr Handley said layers of complexity in the current regulatory framework were likely to scare away any serious investor.
“Whilst the opportunity is great if you’re an investor, one thing you look at is the complex nature and the regulatory environment in which you enter – ours is very complex and that will suffocate new investment in the industry,” Mr Handley said.
“We need some leadership at government level to realise the opportunity to turn this into a thriving profession. In five years’ time we could have a thriving sector providing employment to more people.”
Ms Broome echoed Mr Handley’s concerns that while regulations remained how they were, the advice industry would fail to attract significant investment.
“I think one of the reasons it’s not being developed is we have this compliance system that is not consistent with everything,” she said.
“As a VC I’d be reluctant because I can see how technology can make a difference to the way advice is provided, but the rules aren’t consistent, and until that gets worked out I don’t think I’d want to exist in that space.”
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