On the latest episode of the ifa Show podcast, the Association of Financial Advisers (AFA) CEO Phil Anderson said it doesn’t surprise him that many of the QAR submissions issued to Treasury have recommended the regulatory burden placed on planners be reviewed.
“When you think about it, we’ve had such a period of vigorous, almost constant regulatory reform that is just built over the top of each other,” Mr Anderson said.
“So we’ve had the FOFA reforms, we’ve had the LIF reforms, we’ve had professional standards. We’ve had all the recommendations out of the Royal Commission. On top of that, you’ve had DDO and a range of other reforms. It’s all just one layer on top of the other layer.”
Mr Anderson added that he believed there was a “level of scepticism” on the financial services industry and low minimum education standards — at the time of the Ripoll inquiry in 2009.
“All of those things have changed, and yet what we’ve had at the same time is more bureaucracy added over the top, rather than the capacity to recognise the professional judgement of advisers and allow them just to get on and get the job done,” he explained.
“So it is very appropriate that we’re looking at these significant layers of bureaucracy and complexity and say: ‘The time has come to recognise that it’s a profession. We don’t want to wrap people up in string, make things incredibly complex. Let’s just allow them to get on, and in a professional way provide quality advice to clients.'”
In its own QAR submission, the AFA called for regulatory obligations for the provision of financial advice to be “proportionate” to the level of complexity and risk of client detriment and that a three-year relief period be put in place for client consent forms “to allow for a standardised industry-wide system solution for the collection and transmission of these forms to be developed”.
As previously noted, the AFA recommended the best interests, duty-safe harbour be removed and that existing issues with FDS compliance be addressed.
On the same episode of the podcast, Mr Anderson also said he expects that the Albanese government will make good on its promise to address education standards in the financial advice sector.
Listen to the full episode with Mr Anderson here.
Bernie Ripoll was an Electrician for only 4 years and then completed a Marketing Degree.
Does that make Bernie suitably qualified to be a politician and then run an inquiry into financial services advice ??
Maybe all politicians should be required to have completed a degree in Political Science before being able to practice as a politician ??
It would be nice to think that the man in charge of the nation’s financial wellbeing and therefore the wellbeing of each and every member of the public under him was qualified in some way by economics, accounting or finance studies before becoming Treasurer wouldn’t it? Though it’d be nice to think that those who cast harsh penalties and judgment over financial advisers had some sort of financial advising experience and knowledge themselves instead of being pencil pushers in government departments because they can’t handle any real work or profession.
Spot on. A bit of research reveals that political candidates do not require any level of minimal education, experience or personal standards to be elected to government. Frightening.
This is exactly the strategy corporations use to manage an employee OUT of their business.
They load up the employee with layer upon layer of responsibility and set non achievable targets until the employee breaks and leaves.
They effectively break their will and self esteem to the point where the employee question the negative impact their position is having on their well being.
This is exactly what has happened to financial advisers.
The layer upon layer, upon layer, upon layer of regulation, reform and requirements has destroyed the self esteem, the self confidence and well being of thousands and thousands of ethical, experienced and good people.
It has been an orchestrated and deliberate strategy, much of it based on ideology and elitist, class structure politics.
There is no doubt, many who have the power to influence and set regulation have and still carry an attitude they are well and truly above the status of the financial adviser and it is they who must drive the change because they have the intelligence to know what is best.
This is quite obviously a flawed and failed perception.
What they have achieved is next to nothing in reality, other than significantly reduce affordable access to quality financial advice delivered to the Australian community.
For those who think they know….let me tell you, you have made significant and costly errors in the name of elitist attitudes and a lack of real knowledge.
For those politicians who did not listen, would not listen and chose the power of politics over and above what was right, you should be never allowed to practice politics again.
It has been a complete an utter bureaucratic and regulatory failure.
The issue all starts with the fact that ASIC have been led to believe (by the banks, AMP, etc) that financial advice revolves around products. They have zero appreciation for the fact that there are so many other ways to help clients besides “managing the investments”. Until this is understood by Government, nothing will change.
The problem is Industry Super wants all the FUM – and Financial Advisers recommending retail products is competition.
I agree with this. They do want all the FUM. One of the many problems though, is they simply cannot handle the volume. Time and again these funds have hour plus call wait times, and can’t complete simple administration tasks for their members in a timely manner, if at all. When will this be addressed. Spending fortunes on attracting more members when they cannot handle the amount they already have.
will there even be any sanity to this insanity , how can we be a profession when we are treated indifferently from the larger institutions as they possibly lobby and fund governments ?
sad state of affairs’ all we want to do is look after our clientele which has been extremely difficult the past years .
I think the most recent overkill DDO, TMD and Breach Reporting regulations highlight the lack of professionalism, trust and faith that the Govt. and policy makers have with financial advisers. Until this changes, and ASIC and the Govt. stop treating us all as guilty until proven innocent, it’s highly unlikely we will ever truly become a profession.
What do you mean WE lost their trust? In reality, those policy makers are just being influenced and steered by Super Funds, Banks and Insto’s that blamed others for their crimes. Do Advisers honestly think FASEA was some type of attempt to raise the bar as opposed to a mere get the banks out of jail exercise? We will never be a Profession whilst we have 1) a corrupt system combined with 2) an easy target (Advisers) and 3) a lack of representation.
Nice of you to believe that if your become a professional and as pure as white then you will be accepted or perhaps allowed to survive – meanwhile, there are some very very large Super Funds out there who have massively increased FUM and Market Share in the last few years – and are also able to provide advice on the in house product only – all provided by fees from the members – so you really believe you becoming a professional will change that and you will be allowed to take back market share? Serious?
DDO was theoretically a good idea but it should have stopped at direct distribution with financial advisers being carved out. Advisers have BID and an APL so the investment suitability should be a given. It is only when AFSLs have in-house products that DDO should apply to advised clients. This is not because in-house products are intrinsically bad, it because conflicts of interest are difficult to manage when they are this close. We now have the ridiculous situation where in-house compliance is insisting that every investment recommendation is in accordance with the TMD. This approach by-passes the fact that the APL didn’t come from thin air and has to have a robust proposition underpinning it. If the research that built the APL didn’t look at the TMD, they haven’t done their job properly. Advised clients don’t want to make investment decisions unsupported so are less likely to invest in risky, synthetic, manufactured products that look good but fail the investment adage “if it looks too good to be true, it probably is”. If DDO applies to advised clients, the responsibility (for appropriate distribution) should be with the designers of the APL, not the front line advisers. I wish that legislative responses to all these enquiries, RCs, and Regulator oversight, actually reflected where the risk is and not keep blanket ruling the sector.
The regulators were obviously bakers not bankers in their former lives…
“Layer upon layer and we roll it and fold it and roll it again…”
How about the insanity of having to go cap in hand a couple of hundred times a year begging to get paid off every client. Clients always had the option to turn off adviser fees with an ongoing fee arrangement but no, now its annual and on top of that the trustee advise form. We live in fear of getting one wrong or missing one and having our income turned off. None of this ads value to the client and increases the cost of compliance. Politicians only have to get a renewal every 3 years and if your a senator every 6. ASIC numpties never have to worry about a renewal. Corrupt!!!!
Sorry, can’t agree Wonder Dog. Most clients have no idea how much they pay their advisers. The issue is that they get given a 20 page document each year, the different fees and charges are littered throughout the document and then the client is asked to sign their agreement for the fees to continue to be deducted on the last page. Most people’s eyes glaze over and they just sign away. This is not what informed consent is all about.
London to a brick, if on the first page you clearly outlined all your fees, including the 1% you take as your “adviser fees” and the reason you need to take this amount, most people would think twice about it.
Doubt that would be any different, if fees were on the first page. They are disclosed numerous times in numerous documents. Clients are aware of their fees.
This in incorrect. I assume you’re not a planner. An FDS cannot be a 20 page document. The legislation is very specific.
Mate, sounds like you have never seen a FDS. You have made a statement – “most clients have no idea how much they pay their advisers”. Please provide specific evidence to support your statement. Waiting.
Met a young chap at a function a while back who’d recently been banned for life for being a few days late giving Opt-Ins to clients. He even had emails from clients complaining about the fact they had to receive them, let alone sign them. They all got them back to him of course, but ASIC didn’t care as a rule is a rule is a rule. No practicality. No appreciation at all nor understanding of what clients actually want, expect or demand. Just government lawyers and pencil pushers thinking they know what’s best for everyone and that more paperwork equals less problems.
Yet Michelle Levy can’t understand why advisers are so scared of ASIC and AFCA. It is precisely because of situations like this. ASIC and AFCA abuse their draconian powers to viciously persecute advisers for the slightest legal technicality, even when it causes clients no harm whatsoever.
[b]ASIC and Public Servants are corrupt[/b][u][/u]. Tell Phil Anderson to get on the train and offer them a very good salary for five years and we’ll all contribute. but I’m sure Union Super Funds have paid Treasury and ASIC staff off already, with donations, favours, or lucrative job offers. The logical course of action of providing carves outs for highly skilled, FASEA accredited, educated advisers already bound by criminal and civil penalties clearly won’t occur. If you have some other viable reason why Corruption within Treasury and ASIC is not the reason for this bad regulation, service being defined by a ROA, and Australians getting advice on Tik Tok I’d welcome your reasoning.
For all of the regulation, the big players who were responsible for over $ 6 billion in remediation have still got their AFSLs and none of them have been charged for their actions.
Almost every licensee would have to remediate if held to the same standards of the big instos. Did we really all do an advice document every year for every client since 2008?? that is the standard applied, and the industry is lucky only a handful of AFSLs have had to remediate.
Whilst I partially agree, that does not really absolve them of funnelling into their own product. That was never a sound practice and was bound to catch up with them over time. Quite stupid really.
If I work for say Australian Super – where would product recommendations be heading? You really believe this problem is fixed?
What you’re referring to is ASIC’s definition of Customer Service. The provision of an Advice Document and providing customer service are two different things. I may have been delayed by 1 day in producing a ROA because I was helping the client complete a Disability Pension Application at the Hospital. So on that basis I’d have to hand money back. A classic example of Corruption. 1 Bank Adviser having 4000 clients is very different to 90% of Advisers that provided “service” in a variety of non product ways.
and what is ASIC’s definition of Customer Service? or specifically, where is it in black & white in the Corps. Act. Yes, we all know how ASIC is applying this (at their discretion) but where is it written in law???
Most people at least met with the clients every year….
They may want to start with the fee consent regime (and how this applied by platforms) and RoA’s for intra-fund advice. Quite literally insane.