New advice direction needs to start now: FSC

Meaningful reform in 2022 will be the difference between affordable advice or one that continues a course of structural decline, the Financial Services Council (FSC) believes.

FSC policy director for advice, Zach Castles, said in a column to be published in Money Management’s upcoming magazine that the association hoped this year would see policymakers and the industry agree on a more flexible approach to advice.

He said the advice community had reason to hope the Quality of Advice review would mark the end of two decades of regulatory encroachment on the industry.

“If a consumer wants bespoke advice few businesses and advisers have confidence they can provide such advice without falling foul of the regulator,” Castles said.

“Under the current rules consumers must choose between either an expensive full advice plan that is unaffordable for most, or not get advice at all.”

He noted it was pleasing the government’s focus on ensuring financial advice was affordable and accessible, as well as maintaining robust consumer protections.

“Getting meaningful reform in 2022 will be the difference between achieving an efficient, simpler and less costly advice process for consumers, or one that continues on a course of structural decline,” he said.

“Given the prevalence of small businesses in the advice industry there is a narrow window to relieve the cost pressures facing the sector and the time to act is now.”

Castles also said that work needed to be start on a self-regulatory framework for the advice industry to created pathways for new advice professionals, recognised prior learning, and enabled financial advice associations to take a leadership role in regulating and growing their profession.

“The FSC’s hope is that 2022 is the year in which the advice sector strikes off in a new direction and that the Quality of Advice Review successfully charts that course,” he said.