Financial Services Council (FSC) chief executive, Blake Briggs, believes the regulatory pendulum has “swung too far” over the last decade when it comes to financial advice, and it is appropriate to revisit some of Hayne’s recommendations.
Speaking at an industry event in Sydney on 30 January, Briggs discussed the upcoming federal election and reform efforts in the financial services industry.
Referencing changes made during the Hayne royal commission, he indicated these were necessary at the time but, six years later, were in need of reassessment given their hasty implementation.
“I would start with the fact that the regulatory pendulum for the superannuation, funds management and financial advice sectors has swung too far over the last decade – under successive governments.
“The Financial Services Royal Commission shone a light on, and addressed, some of the systemic issues in the industry. The royal commission, however, is not the sacred cow that it once was.
“It is appropriate for policymakers to now revisit and scrutinise the design and implementation of some of its recommendations, and the impact of that regulation on the industry and its consumers.”
These included simplifying breach reporting obligations and reviewing the Compensation Scheme of Last Resort (CSLR). Figures released on 31 January showed the initial CSLR levy had increased substantially for FY26 from $24.1 million to $77.9 million.
“The fact is the growing cost of the CSLR makes the profession more unattractive for advisers, and the businesses that employ them, who are being saddled with higher regulatory levies to fund it.
“It is in the interests of the government, ASIC and consumer groups, as well as the industry, for the CSLR to be sustainable. Clearly that is not the case at the moment.”
However, he disputed calls from the Financial Advice Association Australia (FAAA) that it should be expanded into other sectors. The FAAA previously argued products are to blame for problems at Dixon Advisory, for example, and should therefore shoulder some of the CSLR burden alongside the financial advice sector.
Briggs said: “The solution is not to expand the CSLR into other sectors, including superannuation, funds management or insurance products. Inclusion of more sectors would create the perception that the scheme underwrites investment losses, introducing significant moral hazard to our financial system. Expanding the scheme would simply accelerate its unsustainable trajectory.”
Instead, his suggestion was to restrict compensation to those who have lost money due to poor financial advice, and simplify the processes of the Australian Financial Complaints Authority (AFCA) to reduce its bureaucracy.
