The Financial Services Council (FSC) has recommended changes to regulatory design as millions more consumers are expected to need advice in the coming years.
It has said regulatory design presently ignores those Australians who require complex or personalised financial advice as they get older or experience a change in circumstances.
Research for the FSC, conducted by NMG, recommends a regulatory approach that is designed on the principle that Choice products should have wider guardrails given the high level of consumer engagement and decision-making.
The FSC has released a framework for regulators and policymakers to consider how the current focus on default products impedes best practice regulatory design. This includes examples of regulation that are designed with default settings in mind, that are ill-suited to industry participants who cater to more complex advice needs.
The research examined five areas of regulatory design that could evolve to reflect consumers and industry solutions that focus on consumers with more complex advice needs, including:
- The Your Future, Your Super performance test that only applies to MySuper and Simple Choice (multisector and broad single sector trustee directed options) and not applying to Broad Choice products to acknowledge the role of financial advisers’ investment selection.
- Regulators, in enforcing the Retirement Income Covenant (RIC), acknowledging the role of financial advisers in Choice customers’ decision-making. RIC interpretation should encourage trustees to support member choice and acknowledge some customers have already made an active choice of product/investment option, and do not require significant further assistance from the superannuation fund.
- Consolidate the Member Outcome Assessment into other trustee obligations.
- The regulatory framework should recognise that Broad Choice product users have already set up and chosen their preferred engagement and communication preferences with their provider.
- Fee templates should capture the range of different fee configurations, allowing Broad Choice fee structures to be more easily reported and contextually interpreted by superannuation members.
FSC chief executive Blake Briggs said: “The number of Australians with complex financial advice needs will grow by 70 per cent to 7.2 million consumers over the next 25 years, and the regulatory framework for consumers choosing their own superannuation and investment arrangements needs to evolve to meet their needs.
“The current ‘one-size-fits-all’ approach to superannuation regulation prioritises simple, default arrangements, adversely impacting the 70 per cent of the market characterised by engaged consumers making investment choices and supported by financial advisers.
“Australia’s regulatory framework needs to evolve to accommodate the superannuation funds, investment platforms and financial advisers that cater to Australians with more complex financial needs.”
Lets cut the crap and red tape.
We know the Governments, (plural) , don’t want advisers because the Banks, Industry Funds and Super Funds pay big big donations to keep a fence around their FUM.
Just let them come up with what they want to do and stop all the charades of ” we are doing the best for the customers”.
I suggest this would actually save money and get things done.
The system is stuffed, we might as well give up.