During a House of Representatives standing committee on Thursday, Liberal MP Jason Falinski made the call after speaking with AFA heads who said an increase in regulatory requirements for the financial advice sector is resulting in increasing costs.
Acting chief executive Phil Anderson noted that costs spent on enforcement activities totalled less than $10 million two years ago and today equate to around $31 million.
“It is all about… the carry over of the Royal commission Investigations and court action litigation,” Mr Anderson responded to Mr Falinski when questioned about increasing costs on the advice industry.
“What that means is the small business financial advisers are paying for ASIC to take litigation action against largely the large institutions that’s come out of the royal commission.
“We stand not to benefit one cent if there’s any penalties that flow from these actions. So that goes straight to consolidated revenue. Financial advisers are funding this litigation and they only stand to benefit should there be an award of cost which invariably does not cover the cost that are involved in these actions.”
“I think it is clear that this committee should recommend to the Parliament that many of the Hayne Royal commission recommendations will do nothing more than do harm and damage to ordinary Australian consumers,” Mr Falinski said in conclusion.
It comes after ASIC released the cost recovery implementation statement for the 2021 financial year last week, which showed that costs to the advice sector have increased by more than $16 million, up over 340 per cent in the last four years.
Mr Anderson said the increasing costs to the sector are having a negative impact on Australian advisers, but also consumers who cannot afford fees associated with financial advice.
“Ultimately, advisers need to make sure they’re recovering their costs,” Mr Anderson told the committee.
“No doubt margins have been strained in recent times. But ultimately the cost to individual clients has gone up and advisers have needed to make decisions about which clients they focus on.
“ So they’ve needed to push up their minimum fee to make sure they’re making sufficient revenue out of each client to cover their cost.
“The reality is that the minimum fee that you can take from a client each year has necessarily needed to go up significantly and those clients have either needed to accept an increase in their fee or they’ve chosen to leave their relationship with their adviser.”
The Hayne RC recommendations have been devastating to advisers and clients. Born of political expediency, handed down in potifency and implemented in ignorance.
Words are cheap, lets see exactly what happens THIS SIDE of the election. I think Mr Falinski gets our position and wants to assist BUT he is a back bencher……Frydenberg &Co make the decisions…..
Voting ALP next election! The bang your hear is the door closing behind me from the LNP room!
Some advisers are actually doing quite well charging $15,000 for advice…some actually don’t want things to change and stand to benefit.
I commend Falinski for his comments. But there is no way he will be able to convince Hume and Frydenberg to undo the stinking mess of higher costs and bat-sh1t crazy red-tape we are forced to endure thanks to this hopeless COALITION government. So I will be voting ALP at the next election and I will continue to tell my clients to deliver their feedback to the government at the next election.
Voting for either major party at this stage is a threat to at least our industry.
Vote for the minor parties/independents, except for the watermelons (Greens) as they aren’t sensible either.
A client of mine said to me during the week, you have told me six(6) times during our meeting how much our practice is being paid and what you do for me? He then went on to say “can we just get on with what I am here for?”
I told him, you can thank the The Hayne Royal Commision and the Libs incompetance for that!
1. FSG
2. FDS
3. Client Engagement Agreement
4. ROA
5. Client Service Agreement- CSA
6. Colonial First State Concent Form
Its funny how many times, when I tell clients and friends about how hard THIS Government and ASIC have made it to get anything done for a client now and that thousands of advisers have left the industry as a result, they respond by telling me “Yeah, but think of all the opportunities you’ve got with so few advisers left the industry.”
As I’ve said to them so many times in response, it would not matter now if I was the only adviser left in Australia and there were a million people standing outside my office front door wanting my assistance, the fact remains it’s almost impossible now to get anything done in this business.
We are forced to jump through ridiculous hurdles, forced to treat clients like babies, are expected to still be 100% responsible for everything that goes wrong, aren’t allowed to get paid anything reasonable anymore for all that and even when an advisor riding insurance like me has done all that, I have the worry for two years that the client is going to cancel or reduce everything we’ve put in place for them which results in me losing either 100% of my income inside 12 months or 60% between 12 months and two years. How can anybody operate in a business with that business model???
It’s just ridiculous. The system has been damaged so badly by people who have no clue whatsoever what they are talking about (i.e Hayne, O’Dywer, Hume, Frydenberg, Trowbridge etc) who have all feathered their own nests out of this industry instead of focusing on what’s really right for Australian consumers who want assistance from advisers in it.
The Hayne Royal Commission has been a terrible joke.
Well there you go…someone in parliment that is starting to talk sense!
Out of curiosity, where is Commissioner Hayne these days?…..Nursing home? or is he just keeping a low profile given that more harm than good to consumers seems to have come from the Royal Commission. The fact that small business FP practitioners and ultimately consumers are wearing the costs and paying for the sins of the banks and large instos is completely unacceptable. I think a Royal Commission into the Royal Commission is needed given that the one Commissioner Hayne presided over appeared to be highly biased and conflicted………
Still counting the money he got from being Commissioner for it, that’s where.
(I reckon he’s had to recount it numerous times though because he keeps forgetting where he was at when he does!)
The LNP have failed advisers,we are being taxed out of existence through levies and red tape.I’ve been in this industry for 31 years and have never seen such disgraceful actions by self serving politicians who know nothing about our industry.I have saved the Government millions in insurance payouts to clients and this is the treatment I get after a lifetime of work.
Josh Frydenberg has an intrenched opposition to Financial Advisers believed to have been allegedly formed regarding dealing his mother may have had some years ago and he had carried resentment and retribution since.
Scott Morrison would be so far removed from the reality of the financial advice process and any respect or appreciation for the benefits that are delivered it is bordering on negligent.
The Liberal Party through Kelly O’Dwyer and the incompetency & disappointment of Malcolm Turnbull to actually achieve anything was a disaster.
The scene of Josh Frydenberg attempting to shake Kenneth Hayne’s hand when handing over his ridiculous and biased recommendations was pathetic at best.
The Liberal Party have done nothing to support the small businesses of financial services practices and have done everything they can to destroy them and impose significant cost and removal of services to the general public.
They are weak and gutless and will do anything they have to to save their own political skin rather than doing what is right.
Gee, I would love to more about the ‘mother incident’ as this might easily explain Frydenberg’s apparent hatred of advisers and the value of what we provide Australian financial advice consumers.
it seems Frydenbergs hatred of advisers is only matched by the advice communities hatred of Politicians and Lawyers.
Of course, Hayne would not have a clue on financial matters. A great waste of time and taxpayer’s money. Wants need is to bring back product commissions. Then the fee for the service model would be redundant and clients would not be charged by the financial adviser. My all commissions payments are the same that way, advisers would not be tempted to make recommendations with the highest commissions. Simple this should have been addressed a long time ago. It worked before.
Good call – THANK YOU Jason
Totally agree with scrapping Hayne Royal Commission recommendations before it destroys all of us. We have lost so much so far
Jason needs to replace Hume who doesn’t have any real grasp on the depth of the issues.
HUME = O’Dywer in reality
There is no way that any industry, profession – small or large business could prosper under the mountain of red tape that has accumulated following the LNP’s legislative attack on financial planners. The big end of town has mugged the financial planning opportunity and then run away – the Gov’t is now kicking the guts out of the Financial Planners who remain, predominantly small business owners with their houses on the line, leaving consumers of advice more confused and mistrusting than ever. I will never forgive this government for their bloody minded ineptitude.
Frydenberg must go.
Frydenberg has killed Advisers for 8 years.
Advisers must unite and treat Frydenberg with the same contempt and disgust he treats us.
Out with Frydenberg !!!!!
While I really appreciate Jason’s efforts, he should have read the Hayne2 explanatory memorandum for the bill he voted on, which clearly informed the MPs & Senators that this legislation would push advice costs up by $30 million a year. And he still voted for it. He could have chosen not to vote for it. Most of these Liberals have brains of a rabbit. Talk is cheap. Bin this bill.
Too little too late, the FPA never pushed this message as well as the AFA, good work Phil thank you
It is true that the Hayne legislative changes are costing consumers an enormous amount for no benefit …. except …. that oh so satisfying feeling of taking revenge against those big institutions.
Do consumers care that they are losing access to advice?
Someone worried about election time? Although I will never vote Liberal again, good to see one of them is not a socialist.
Falinski has a very save blue-ribbon seat. The LNP and ALP/Greens coalition know financial advice is not an election issue.
True, but he can be ousted by his own party, a common experience.
It’s all about educating my clients on the causes of advise costs – Liberals. I’ll take some Liberal votes don’t worry about that. Perhaps not an issue for the Liberals today, but one day……..
You do realise Labor would be much worse. Lessor of two evils.