The complex, multi-layered nature of the regulatory environment covering financial advice is alienating many consumers and small businesses and placing substantial strain on accountants, according to major accounting group, CPA Australia.
In a pre-Budget submission filed with the Federal Treasury, CPA Australia has urged the Government to fund a holistic review of the regulatory frameworks for financial advice, with the objective of such a review being to ensure that regulations are fit for purpose and to reduce overlaps and costs.
In doing so, the CPA Australia submission pointed to the number of regulations and regulatory agencies touching advice.
“For example, in relation to financial advice, advisers must comply with the Corporations Act, the Tax Agent Services Act, the National Consumer Credit Protection Act, plus there are obligations imposed under the ASIC Act and the Financial Adviser Standards and Ethics Authority (FASEA), amongst others. Often there is no harmonisation between these regulatory frameworks, or even within a single regulatory framework,” it said.
“Depending on how the licensing and registration system is set up, an accountant in practice may need to hold multiple licences and/or registrations to be able to provide one piece of advice,” it said.
The submission said CPA Australia’s research had found that almost 90% of accountants in practice believed the compliance burden of differing legislative frameworks was an issue, and less than a quarter said they had a clear understanding of their obligations.
“Further, this regulatory complexity is increasing the costs many millions of Australians pay each year to access the services of accountants, with almost 50% of practitioners stating that they increased their fees in the past year to cover increasing compliance costs,” it said.
CPA Australia pointed out that this was also happening at a time where the financial services sector was experiencing a major structural adjustment, with service providers exiting the sector in significant numbers.
“The impact of this structural adjustment is a growing advice gap in the market, which is to the detriment of those who need financial advice in an increasingly complex world with an ageing population.”