Financial services minister Jane Hume has conceded the implementation of the FASEA reforms has had a devastating effect on the business environment for the advice industry, suggesting the government will aim for “a balanced approach” when it assumes the authority’s standards-setting responsibilities.
Addressing the FSC Life Insurance Summit on Wednesday, Jane Hume said the FASEA reforms had “only focused on one piece of the puzzle” when it came to necessary reform in the advice sector.
“FASEA was established in order to implement standards including education requirements, a code of ethics and a program of continuing professional development including an exam that represents a common benchmark across the industry,” Ms Hume said.
“But FASEA only focused on one piece of the puzzle, that was creating standards and maximising the quality of advisers. They didn’t focus on keeping the costs of doing business low or making advice readily accessible to consumers.”
Ms Hume acknowledged that the amount of red tape currently being imposed on advisers “increases costs and takes away time from doing their job”.
“For small businesses the problem is even more acute – 90 per cent of advisers are sole traders or part of a small business,” she said.
“The government is committed to the professionalism of the advice industry certainly, but we want to make sure that we maintain a balanced approach to achieving this goal.”
Ms Hume said the movement of FASEA’s standards-setting powers into Treasury, due to take place in January 2022 under draft legislation released earlier this week, would achieve “regulatory alignment” for the sector, while the establishment of a single disciplinary body within ASIC would move the industry closer to a self-regulatory approach.
“The legislation includes the creation of a single disciplinary body for advisers which will be run by industry professionals and administered by ASIC,” she said.
“It’s my hope the passage of this legislation will enable advisers to enforce standards within their own profession in a way that not only meets but surpasses community expectation.”
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