Regulation turning advisers into ‘admin assistants’
The Government needs to intervene to keep limited licensees in the industry and mounting regulation was turning advisers into “admin assistants with Government records”, according to AccountantsIQ founding director, Bronny Speed.
AccountsIQ helped set up limited licensees and also ran the Cram 4 Exam preparation course for the Financial Standards and Ethics Authority (FASEA) exam.
Speed said the fraction of revenue limited licensees made from holding a licence was not worth the cost and effort in the current regulatory environment, and there needed to be some form of Government intervention to keep limited licensees in the industry.
“We need to have some form of recognition that accountants are highly-skilled and qualified to talk in the basics that a limited licensee used to be able to provide,” Speed said.
“There needs to be a change of Government policy and there needs to be recognition that FASEA and all the regulatory regime that’s come in post-Royal Commission is designed to account for those who are professional practitioners in financial advice, not for those who have an accounting business where they need a licence to be able to talk about a super contribution.”
Speed said more and more limited licensees would leave unless this was addressed, as well as the funding for levies which needed to include product issuers.
“Now financial advisers have to report on funds management products… can we please be careful that financial advisers aren’t just becoming admin assistants with Government records,” Speed said.
“Breach reporting, design and distribution obligations (DDO), it just goes on and on and when limited licensees are looking at all these new things, there’s no differentiation between a full licensee or a limited licensee.
“There’s a difference in revenue – that’s massive – there’s a difference in skill set and what you’re able to do.”
For limited licensees, Speed said the potential revenue was not worth the risk of having the Australian Securities and Investments Commission (ASIC) looking through the business on the off-chance it found a breach.
“It leaves a massive hole for consumers, more and more highly-qualified people leaving the industry can’t talk about super yet we’ve more and more super ripped out of the system in the last 12 to 18 months,” Speed said.
“We have more and more people who want advice… and the result has been more and more people leaving and the cost of advice is going up and the advice gap is getting bigger.”
On the adviser exam, Speed – who had taken the exam in 2019 in addition to providing preparation courses – said it was an aptitude test to trick as opposed to straight-up testing of advisers’ knowledge.
“People are falling over and not passing because they’re not reading questions and they’re answering them by looking into them into too much detail without understanding the underlying methodology,” Speed said.
“There would be many people who failed who did the work and got the second-best answer as opposed to the best.”
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