The removal of the Financial Adviser Standards and Ethics Authority (FASEA) has been universally welcomed by the industry, but all agree this is not the final battle.
It was announced it would be scrapped with the standard-making functions rolled into Treasury, while the remaining elements including exam administration and the single disciplinary body would be part of the expanded mandate of the Financial Services and Credit Panel (FSCP) inside the Australian Securities and Investment Commission (ASIC).
Advisers would still be required to continue with their education obligations and adherence to the code of ethics.
FASEA said it would work closely with Treasury and ASIC to ensure an orderly transition to the new regulatory framework.
“In the interim FASEA continues to administer its functions under the Corporations Act including administering the adviser exam and approving bachelor or higher degrees and equivalent qualifications,” it said.
“FASEA notes that the legislated timeframe for existing advisers to pass the FASEA exam by the end of 2021 has not changed and encourages advisers who have yet to pass the exam to continue their studies and sit the exam.”
CPA Australia said it was a good “first step”, but more was required as affordability and accessibility of financial advice was still a significant issue.
“Practically, this decision does little to address overlapping, duplicated and sometimes conflicting regulatory requirements on financial advisers,” it said.
“Transferring responsibilities from FASEA to ASIC and Treasury, without wholesale regulatory reform to address these issues, is akin to kicking the can down the road.
“The government must do more to address the causes of the regulatory and compliance burden on financial advisers.”
Dante De Gori, Financial Planning Association of Australia (FPA) chief executive, praised the move to a single disciplinary body which it had long advocated for.
“The FPA has been calling for a simplification of standards setting and the establishment of a single disciplinary body to reduce red tape and untangle an unreasonably complex regulatory framework that is stifling the financial planning profession and driving up the cost of advice,” De Gori said.
“This body should have primary responsibility for government oversight of the conduct of financial planners, setting mandatory professional standards, investigating potential breaches of mandatory standards and law, and applying discipline.”
Philip Kewin, Association of Financial Advisers (AFA) chief executive, said it supported any move that removed red tape but that there was still work to be done.
“Financial advisers and the advice industry as a whole have been hit with layers and layers of regulation that have increased the cost to provide advice without any clear consumer benefit,” Kewin said.
Bronny Speed, Chartered Accountants Australia and New Zealand (CA ANZ) financial advice leader, said this reform was hopefully the start of a reduction in regulation, so that more individuals and small businesses could be helped on the road to recovery from the COVID-19 pandemic.
“This means it has never been more important for our members to highlight their pain points to ASIC as it starts to shape the future for financial advisers,” Speed said.
John Maroney, SMSF Association chief executive, said it was a welcomed initiative, as ASIC had the expertise to adjudicate on professional misconduct and Treasury had the appropriate standard-setting skills.
“The Association has long held the position that financial advice industry regulation needs to be streamlined to reduce unnecessary complexity and this reform meets this objective,” Maroney said.
“The current regime sees advisers having duplicate obligations, multiple regulators, and multiple standards that result in unnecessary complexity and cost.
“This is forcing many professional financial advisers to question whether they should continue to provide advisory services at a time when consumer need for financial advice has never been greater.”
