“Fixing the advice area is the great unfinished business in the financial services area,” the shadow financial services minister believes.
Speaking on our exclusive podcasts, Stephen Jones criticised the government for “monumentally mishandling” regulatory changes across the financial services industry and vowed to do better if Labor is elected to government.
The shadow financial services minister and shadow assistant treasurer gave a candid assessment of the financial services industry, labelling the poorly managed “tsunami of regulatory changes” as the main culprit for adviser exodus in Australia.
“There was a whole bunch of changes that were in play, there was a known timeline for it, not going back months or even years. Some of this stuff has been five, six years in the making, how a government could monumentally mishandle a bunch of this stuff is beyond belief, particularly a government that says it's a good economic manager.
“It is just beyond belief the mess that they've created in this sector,” Mr Jones said.
Labor, he said, has a couple of things on the agenda to iron out the kinks.
“Firstly, we believe that the transition to a capital P, professional financial advice sector is in the best interests of consumers, but also in the best interest of the profession. So, 100 per cent on board for that project. It needs to be done properly.”
The government's error, he said, is to think the profession is homogenous.
“Assuming that everybody who holds a financial service licence is providing one sort of financial advice, whether it's life advice, risk advice, or whether it's wealth management advice and trying to run everyone through a professional qualification that fits that particular view of what the industry looks like is just absurd,” he said.
“So, we think fixing the advice area is the great unfinished business in the financial services area. It absolutely needs attention.”
Observing the necessity for base level knowledge across the industry, Mr Jones noted the increasing need for advice specialisations.
“There is a core level of qualification that is needed, that is common to all of them, but there are also specialisations within the profession that need to be accounted for in the accreditation and licencing system.
“We want to fix that. That's absolutely critical.”
He also vowed to push for a series of new business models but opposed the idea of tweaking the intra-fund advice regime to allow super funds to provide a broader range of advice to consumers.
“It has been pitched to me that the 'silver bullet' in all of this, the one big solution is to let all the big funds, whether they're industry funds or retail funds or whatever, just change the intra-fund for advice rules, and that'll fix everything. The funds can just get into the advice business. I am incredibly unattracted to that proposition.
“If we did that, it'd be like just setting the clock for the next Hayne Royal Commission with that sort of supercharged vertical integration model.”
Instead, Mr Jones said that Labor wants to work closely with advisers to reinvent the industry.
“Government sets the regulation and facilitates … but I think it's up to the sector, the advisors, the professionals within to come up with the business models that provide consumers with what they want in a safe environment.”
For more information, tune into our podcast here.
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