More principle-based advice legislation needed
Advisers need less prescriptive and more principle-based legislation in order to make the industry more efficient and more affordable to middle Australia, according to Diverger Limited.
Speaking to Money Management, Nathan Jacobsen, managing director of Diverger Limited, said the Corporations Act had become very operational and specific in how outcomes should be delivered to clients, rather than principle based.
“A reversion to a less prescriptive, less black and white and more principle-based legislation will actually provide, what is now a very professional adviser population, with the flexibility to execute advice more efficiently,” said Jacobsen.
In particular, fee disclosures and opt-in obligations had become “extremely prescriptive”, according to Jacobsen.
“They also place obligations, not just on the adviser, they place it on the licensee, they place it on the platform providers, and ultimately, the super trustees, through different legislation, see themselves as needing to see evidence as well,” he said.
Jacobsen said this had created a multiple-tier system of oversight for advisers.
“And this is on an adviser population that's been under a code of ethics now for two years,” Jacobsen said.
“It has been through the ethics exam; it no longer has passive revenue streams so it's actually substantially a more professional cohort of advisers.
“So we're over monitoring [and] over regulating the advisers and I don't think the evidence, when you look at the stats coming in at Australian Financial Complaints Authority (AFCA), supports that.”
Coming into an election, Jacobsen said the industry would love to see an intent to simplify adviser legislation whilst maintaining consumer protections.
“There is certainly support for that from both sides of politics but not a lot of detail,” he said.
“So I certainly would like to see a more considered approach to legislative approach change over the next two or three years and one that has more consultation with the industry in advance of the changes rather than at the last minute.”
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