In response to the Australian Law Reform Commission’s (ALRC) report, Financial Services Legislation: Interim Report B, the Stockbrokers and Investment Advisers Association (SIAA) backed the creation of a Rules Advisory Committee but argued against the inclusion of consumer groups.
In the ALRC report, the body proposed that an advisory committee be established that must be consulted before new scoping orders or rules are made. It said this Rules Advisory Committee could comprise representatives from industry groups, consumer groups, and legal experts such as practitioners and academics.
SIAA agreed that a committee of technical experts would effectively assist with the drafting of important scoping provisions.
“It is important that the proposed Rules Advisory Committee represents the entire financial services industry and does not apply the ‘one-size-fits-all’ approach that has created undesirable and unintended consequences for the stockbroking and investment advice sector,” the SIAA submission said.
“We have previously pointed out in our discussions with the Commission’s review team and in our submission on Interim Report A that one of the most egregious examples of a ‘one-size-fits-all’ approach to financial advice impacting the stockbroking and investment advice industry was the approach by the Financial Adviser Standards and Ethics Authority (FASEA) to the education standards and Code of Ethics (which were administered by FASEA until 1 January 2022).
“FASEA’s lack of understanding about how stockbroking and investment advice differ from financial planning provided significant challenges to the stockbroking and investment advice professions and continues to do so while the legislative instruments developed by FASEA remain in place.
“It is an important example of the damage that can be done to an industry when those imposing standards upon it do not fully understand the way the industry works or take a narrow view that excludes sections of the industry.”
The industry body, however, said that the make-up of the Rules Advisory Committee should not include consumer groups, arguing that a body that deals with technical issues should be left to experts.
“We note the proposal that the Rules Advisory Committee could comprise representatives of industry groups, consumer groups and legal experts such as practitioners and academics. While we understand the importance of legal experts and industry groups being represented on the Rules Advisory Committee due to their technical and subject matter knowledge and expertise, we have significant concerns about the inclusion of consumer groups on such a body,” SIAA said.
The group argued that consumer groups have had “significant influence” over the policies that have shaped the financial advice profession over the last two decades, to the “detriment of both those providing and seeking advice”.
It noted that “while it may be appropriate for the consumer voice to be considered at the policy level, there is no benefit in including consumer groups on a body that is dealing with technical legal and drafting issues”.
“We would recommend that consumer groups not be included on the Rules Advisory Committee for this reason.”
In October, the ALRC launched Interim Report B and invited stakeholders to provide feedback on the proposals and questions by 30 November 2022.
