Planners are over-burdened and over-regulated

22 October 2019

It has become almost an unworkable proposition to provide advice to consumers over the past 10 years because of the plethora of regulation imposed on financial planners, according to the Financial Planning Association (FPA).

What is more, the FPA wants the Government to address the situation via a review by the Productivity Commission, the Australian Law Reform Commission or as part of the Royal Commission’s recommendation 2.3 for a review of measures to improve the quality of advice.

In a submission filed with the Federal Treasury dealing with the role of the Tax Practitioners Board, the FPA has claimed that financial planners must comply with four laws which are regulated by seven different regulators and which are subject to complaints handling and disciplinary interpretations by three different bodies.

Related News:

It said that, as well, planners are also subject to authorisation, supervision and monitoring by a licensee.

“While in theory there is logic for these different bodies of law and regulation, it has become an almost unworkable proposition to provide advice to consumers over the last 10 years due to a lack of consultation and discussion between these different bodies,” it said.

“Professional Associations – whose primary focus is development of professional community for the good of the community who they serve, have been left frustrated by the lack of discussion and consultation between these bodies – which has left in some instances crippling regulatory cost and burden.”

“As stated, the lack of consultation and agreement between all of these entities on a set of minimum standards under which the profession of financial advice is able to operate under, the outcome has been a significant amount of duplication and additional cost created by this unworkable regulatory environment,” the FPA said.

“What is worse, when a consumer has a complaint, there are 10 different entry points (although 14 when you consider the number of regulators) at which a consumer can take their complaint up at. To this point - at some points there are multiple bodies and regulators. Further, if a financial planner has made a mistake, sanctions may be imposed by all seven regulators, three investigative bodies and their licensee for a single error (plus professional associations if applicable).”

Recommended for you




oh here they come. welcome fpa. 10 years on, finally. better late than never saber tooth tigers. ha ha

True - FPA too busy looking after its big mates.

ha, do you really think this is about consumers getting good advice, and good outcomes.

do you think this is about giving financial advisers a hard time.

this is about control. Who has it, and who is excluded.

here are two clues, 2.8 trillion now, in 20 years 9.5 trillion

have a guess what it is about ?

Which is why my business has its back against the wall.

they are killing us. no one files so much paperwork. i have probably filed more paperwork in the last 7 years than a lawyer does in a 35 year career.

but i am sure they are going to come up with more.

on top of everything else, we now have to give an "i'm not independent" disclosure

"almost" no, impossible to satisfy all obligations in law and make a profit (yes, we have not all taken the vow of poverty). therefore, not possible.

Oh, and those you-beaut SoA's that ASIC and the lawyers came up with nearly 20 years ago, which the FPA endorsed, ASIC has now decided no-one can understand them. Could have told them that years ago, but I'm the one who has to do the exam and the upgrade to my qualifications. Thanks FPA. Its been a bumpy ride, and now here's my station. Time to get off the trainwreck.

This industry is drowning in a sea of relentless attack and manipulation and in an even deeper sea of over regulation and over compliance.
The compliance regime has in fact made the advice process significantly more complicated, excessively time consuming and impossibly difficult to constantly address every single requirement to the minute degree.
Is this really what the Govt and the Regulator want in relation to financial advice only being available and cost effective for those at the higher end ??
It seems the regulator is pushing for robo-advice as a future solution, however, is this appropriate ?
Clear, concise and well understood strategy and advice in the clients best interest and at an affordable cost all framed by an ethical and moral parameter is surely the goal.
However, the Govt and the regulator is making it so overly complicated, so overly costly and from the consumer perspective, so overly confusing it has become totally counter productive.
I note this week that some school curriculum are being rethought entirely to get back to a more streamlined and efficient structure focusing on the basics in order to achieve a better prepared student outcome.
Maybe the financial services industry needs to to the same.
Whilst change and progression is inevitable, the cost of doing business is prohibitive.
This business is first ,second and third, a people business.
It is about establishing rapport, establishing trust and establishing and maintaining credibility.
It is also about the translation of often complex principles and information into bite size chunks of understanding that ensures the client is making a well informed and well understood decision to act or not act.
It's time for a significant re-think on really what is trying to be achieved here.
Is it to make it so overly complex that it makes it easier to prosecute?
Or should the primary obligation be to ensure as many people as possible receive quality guidance and advice that potentially could result in significant benefits to their lifestyle, retirement or financial protection ?
It has added enormously to the both the time cost and the process cost to the provision of advice which will result in a massive void of consumers being unable to access quality advice at an affordable cost.

this is all going to come out in asic's unmet advice report in 2021. unfortunately for ASIC, and i honestly believe they have no idea what's going on. we won't be able to turn back the clock, as many older highly experienced advisers will be gone.

if you don't believe me, just look at what happened in the UK. total disaster, and they had to unwind it all.

we are not in the same fortunate position as the average age of an adviser is probably close to 60, and there is virtually no supply that can be turned on quickly to fill the gap.

a lot of good advisers who i know will remain - like me- are very reluctant to provide advice or take on a client. why should I put myself at risk?

another delusional person. do you really think :

a. product manufacturers
b. fpa/afa
c. asic
d. choice
e. compliance industry
f. dealer groups
g. no-fee no win lawyers

are going to allow disclosure rules that make sense, are less complicated so that either the clients or the advisers who can assist them can easily make sense and give advice effectively?

there is a whole industry that exists on the back of bad regulation. they would not be around if things were simplified. that industry has billions to spend, and it will to preserve the status quo.

advisers don't have a chance. i'd suggest you start to work on the ethics paper, and the exam and start drafting the new hayne disclosure, "i'm not independent" that is going to come out in FG 003 and giving it to clients.

don't just learn the rules, master them. and play the game to win.

do you mean no win no fee lawyers?

actually, i rethought the question. there is always a fee, no matter whether the client wins or loses. the lawyer always wins.

i get it, good one.

Generally this situation is just as much fault of the FPA for never doing anything until its too late. Advisers can at least take out one level which is their FPA membership. As the diagram above states "if applicable". The FPA are not applicable anymore.

no, you can't. advisers have no choice. a lot of advisers who have done the study have already moved on from the fpa or afa to another association or just registered with the tpb directly, as there is no requirement to be part of an association (you can easily meet the CPD requirement through your dealer group). the fpa/afa know all that, they sure called me when i left to ask why i was cancelling my membership.

it's only the advisers who haven't done the study - and in fairness probably not going to, or need to - who are still members of the fpa, they have no choice as the only way they can gain tpb registration, which is required, where they lack studies is to be a member of a recognized tax(financial) adviser association.

that's why the fpa could give a rats as they know they have most of their adviser members (70% by their own submissions) don't have a formal tertiary degree.

this is not a bad strategy for them until 2024, after that well they will have to find another lobbying job. but they are so bad at lobbying who is going to hire these incompetents?

The FPA is way to late on this issue. We've arrived at a situation where now under the FASEA code of conduct it's no longer possible to even be an FPA member and recommend financial products. You have a conflict. The FPA gets payments from firms connected to product manufacturers and uses those payments to provide certain services to it's members.... and so when an FPA member recommends those same products than that's a conflicts. As an illustration AMP pays the FPA $60,000 a year to direct the FPA to follow it's instructions, the FPA then uses that money to provide a FASEA update for free. You then recommend AMP North knowing as a member of the FPA of this relationship and the free webinar. Under a Labor Government, Union Super fund controlled FASEA code monitoring body , you've got a breach. Conflicts under FASEA can't be controlled, monitored or managed, you just can't have them. Goodbye FPA.

It wouldn't be so bad if all this excessive regulation was clearly helping consumers. But it's not. It is making things much WORSE for consumers.

Too much of the regulatory agenda has been hijacked by "consumer associations". But let's be clear. "Consumer associations" do NOT represent the best interests of consumers. They are controlled by ideological zealots and political wannabes who are completely out of touch with real Australians.

Add new comment