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.
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).”