The financial services industry will spend a total of almost $3 billion to implement eight regulatory change proposals, according to Tria Investment Partners.
As part of research it undertook for the Financial Services Council (FSC), Tria arrived at this figure after calculating costs to implement reforms in the advice industry such as the Future of Financial Advice (FOFA) reforms, Life Insurance Framework, adviser educational standards, as well as MySuper, the Australian Prudential Regulation Authority (APRA) reporting, SuperStream and other Stronger Super changes.
According to Tria figures, the industry had spent $2.75 billion across the value chain in the past five years, and it could spend more than $186 million in implementing impending regulatory changes.
Tria principal consultant, David Hutchison, said that while regulatory changes were required, it should be noted that customers ultimately incurred the costs.
He added that the benefits of some changes, such as MySuper, were not yet visible.
“Even worse, the changes to the changes (which were then changed again or in some instances, unchanged) has inflicted a lot of time, cost, and extra regulatory burden on the industry,” Hutchison wrote in an article.
Advisers could expect to spend $31 million to implement the life insurance framework, while insurers could spend $79 million. The incoming adviser standards could cost $136 million, while the FOFA reforms could cost another $41 million.
Superannuation funds could expect to spend $383 million to implement FOFA reforms, while SuperStream would cost $1.23 billion to implement.
Hutchison said the industry should henceforth work with the government and regulators to establish a more “streamlined approach” to regulatory changes, and even proposed deregulation.
“That would provide an opportunity for the industry to innovate and reduce costs to members. And that can make a big difference to member outcomes,” he said.
