It’s no secret that the Australian financial services industry continues to face a number of challenges in managing regulatory change.
To evaluate the debt of these challenges, in early 2022, Deloitte rolled out a regulatory change survey to 18 organisations within the industry across various sectors including the superannuation and wealth management sector.
What the multinational found is that this sector is particularly reactive in identifying regulatory changes.
“Based on survey responses received, we observed that this sector demonstrates an awareness for regulatory change, but it is often not prioritised, which increases the risk of non-compliance early on,” Deloitte said in a report which compiles its findings.
Deloitte estimated that the sector’s spend on regulatory change ranged between $27 million and $143 million, while the upper limit sat at $321 million. This, the multinational explained, is mainly due to the outcomes from the Royal Commission into Misconduct in Financial Services.
As for how wealth and superannuation professionals lobby and influence regulators before regulation has been finalised, 67 per cent told Deloitte they rely on industry bodies, while 33 per cent said it depends on the nature of the regulation.
The sector’s reliance on industry bodies was explained by Deloitte as being owed to “these sectors not having a separate internal regulatory affairs team”.
The number of industry bodies in the advice sector has been a hot topic of late. Joining the ifa on a recent podcast, Peter Johnston, executive director of the Association of Independently Owned Financial Professional (AIOFP), said that there is “no doubt” the 13 associations that are currently active in the industry is too many.
“There’s 13 associations, it is ridiculous. Now, if you compare that to the mortgage brokering industry, there’s two. They both got on and they got it fixed.
“Canberra sits back and says, ‘[the advice industry] are just a rabble’,” Mr Johnston said.
“So it’s got to be rationalised. We go back about four years ago, there was 30,000 member advisers back then. Now there’s 17,000, there’s still 13 associations. Something’s got to give.”
Mr Johnston’s words drew quite a impassioned response from the ifa’s readers, with one reader noting: “And herein is the issue with our industry. Too many varied opinions and issues which is why our governments feel the need to determine their own interpretation of how our industry should operate. We are really quite pathetic.”
Another said: “The fall in adviser numbers will see this issue resolve itself. The associations will simply not be able to survive without consolidating”.
A majority of readers agreed that a review was needed in order to amplify the industry’s voice in Canberra.
So Deloitte is suggesting that we create our own rules to hobble us, before ASIC do?
Wow!
I’m sure the advisers that went and got Masters Degree in Financial Planning only to be told by FASEA they don’t meet current definitions might disagree…. I’m focused on survival, not adaptation. I’m running to keep up, but regulation is changing every 2 years. Also which regulatory body am I supposed to be ahead of? There are at least a dozen. Let’s also remember the electronic signature act came into force about 20 years ago so I’m not the only dinosaur and let’s point some fingers at some super funds still talking about faxes and post.
I kind of understand where he is going with this however to be proactive to potential regulatory change you need to first set your governance oversight structures up at an organisational level which requires a very different mindset when building your operating model
To date I only know of one business that achieved this and won an award for it however their Pom CEO left our shores and the business closed
For the average one man band self licensed adviser it would be virtually impossible to interpret ASICS legislation changes and direction, especially over the last 2 years
Whats missing in my opinion is the specialist talent required to build proactive frameworks
“Reactive to identifying regulatory changes”????…….what a total load of garbage. The required reaction to the regulation was to onerously and excessively dot the “I’s”, cross the “T’s”, over articulate every possible outcome in a clients lives and cover your butt at every angle (i.e. oversized, over articulated SoA’s) because that one small thing you leave out of your documentation is what vexatious “why not litigate” ASIC or some vexatious lawyer will use to destroy the one man show adviser. This is what happens when lawyers and academics who have zero front line Financial Adviser experience or knowledge, get together to tell advisers how to suck eggs. Next these lawyers will be telling mechanics how to fix cars.
Proacative!?
It’s hard to be proactive to constantly changing confusing unnecessary and overreaching legislation when we are running small businesses.
Our industry organisations (FPA, AFA, IOFP) need to combine/work in unison to represent us, and the community we serve. The FPA et al need to purge themselves of any institutional funding/influence as it’s a clear conflict of interest.