Govt says it wants to restore trust in advice

The motivation behind the Government's interventions in financial advice have been to restore trust and confidence that has deteriorated in the advice space, the Treasury said.

Treasury division head, retirement income, policy division, Jenny Wilkinson, told a panel discussion at the 2017 SMSF Association conference in Melbourne on Thursday that the series of reforms in the advice sector including the Future of Financial Advice (FOFA) reforms, the accountants exemption to advise on self-managed superannuation funds (SMSFs), and increased education and professional standards were all driven by a desire to improve the quality of financial advice.

"This is as is often the case a consequence of the behaviour of a few individuals rather than it being everyone but there's always concerns about whether the system is working well," Wilkinson said.

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"So clearly it is a concern for government but it also has to be a concern for industry because it is vitally important I guess that industry actually has the confidence of the public."

The government also recognised the need to ensure existing arrangements were operating smoothly, which drove it to provide additional funding to the Australian Securities and Investments Commission (ASIC) to strengthen its enforcement tools and improve the accountability of the issuers and distributors of financial products.

"My sense is the government is very much trying to come at this from both perspectives both looking at what are the new things we need in the framework to provide the confidence but also what are the things we need to ask of the existing regulators in terms of them working well together," she said.

The government also wanted to equip regulators with sufficient tools to ensure existing legislation was operating at peak efficiency.

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There are unintended consequences of course but they were all totally foreseeable - Higher costs for advice, less productivity, less people getting personal advice. So now we have direct sales channels being ramped up in anticipation of the adviser being priced out of the market - it's happening now. It was foretold. The fact that major financial institutions are selling their wealth divisions is a pretty good indicator.

Regulations increased, professionalism increased....yet the advice process still stuck in the 90's.

But ASIC does not have a system to check on the quality of direct advice. Further since ASIC believes it is general advice only they do not even want to put a system in place to check on it..... I dare someone to ASK Kell to inform people on how ASIC is checking of general advice quality, and show the public the results.

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