At the heart of our five-year roadmap, launched last year, is the desire to reduce red tape and the duplication of regulation in the financial planning profession. Achieving these goals will not only cut costs for financial planners but will make advice affordable to Australians.
Although it is a long-term plan, we have already achieved some early wins. In December, only six months since our policy platform launch, the Government announced that it would wind down the Financial Adviser Standards and Ethics Authority (FASEA) and has released draft legislation on a single disciplinary body (SDB) for the profession.
This is a major development for our profession. It also addresses two key pillars of focus in our roadmap around members and advocacy.
A streamlined legislative framework for our members is part of the financial planning model of the future for our members.
Through our regular conversations with Government, the proposed SDB legislation includes a number of reforms we have been advocating for. This includes simplifying professional standards, standardising regulation and removing duplication in regulators which means financial planners will no longer need to be separately registered with the Tax Practitioners Board (TPB).
But it is crucial we get this reform right. One of our key concerns is trying to avoid unnecessary costs and duplication in the system. We agree in principle to the SDB, but we will be holding the Government to account to ensure that it is just that – a single disciplinary body. On the surface it seems we are on the path to achieving that and we are working through our submission to the consultation process.
THE GOOD FIGHT
We have continued to dispute the Australian Securities and Investments Commission (ASIC) levy model since it was introduced three years ago. The levy emerged as one of the big challenges for financial planners in our recent member survey.
This is not surprising given that it has increased by 160% over three years. We have already been on the record for calling the model flawed and dangerous and believe it is timely for this review. We want an outcome where any levies won’t impact the competition and viability of financial planners.
The bigger picture for us is in advocating for tax deductibility of financial advice fees. We are actively working to change this position in the interest of the Australian public – tax deductibility will mean more choice and access to professional advice for more Australians.
We have also been influential in driving some practical amendments to a number of the Royal Commission recommendations. One of the recommendations was to ban adviser fees from MySuper. We were successful in overturning that recommendation. Consumers can still have a choice of paying a financial planner out of their MySuper.
Our commitment to helping all financial planners build sustainable and scalable practices over the long-term will be achieved through a consistent voice and courageous advocacy and a key part of this is through industry collaboration.
MAKING ADVICE AFFORDABLE
We support ASIC’s consultation process on affordable advice. As it is a key strategy in our policy platform we have been actively engaged with ASIC on this critical issue.
While the Government can look at the legislation, the role of the regulator is to provide guidance and give the industry more clarity and certainty on the provision of simple advice. There is no need for 100-page disclaimers to provide simple advice. ASIC’s decision to allow financial planners to provide shorter records of advice instead of the lengthier statements of advice during the pandemic proved that the profession can operate within the laws in a more cost effective way, and we will remain focused on delivering the right outcomes for both our members and consumers.
Another way to deliver on affordable advice is through technology. Technology is playing an increasingly important role in advice businesses as financial planners look to digital solutions to drive efficiencies. We will be encouraging and supporting financial planners to adopt technology as they must recognise technology is their friend and an efficient way to deliver cost-effective advice to clients.
SECURING THE FUTURE OF OUR PROFESSION
We want Government and regulators to start talking about advice more positively. While it is not their job to do a recruitment drive for planners, it is their job instil confidence and trust in the profession. Now that the Royal Commission recommendations are being implemented, Government and regulators must start backing that legislation. They must start supporting their own reforms through positive messaging and giving Australians confidence that the right safeguards are in place and that it is important that people get advice. This is even more crucial in the current low rate environment where people may be encouraged to take on more risks.
We are also pushing hard to address the risks in the growing area of unregulated advice. We are seeing a rapid rise in ‘money coaches’ or ‘influencers’ who are operating outside the regulations because it is too costly. These ‘money coaches’ and ‘influencers’ also operate with no regulatory obligations.
There is concern from our perspective, that this is an area of growth. There are no safeguards, and this could lead to consumer detriment. Unregulated ‘money coaches’ don’t have access to professional indemnity, do not operate within the realm of the Australian Financial Complaints Authority (AFCA) and sit outside the ASIC regulations, leaving consumers completely exposed. It is an example of how, without Government foresight, a system can be created that encourages people to take on advice.
The only thing ASIC can do is to monitor if these people are providing any unlicensed services and report to the public of their existence and what to watch out for. The main question is what legislation could be developed to bring these people into an environment where there is regulation and oversight, but also allow existing highly-qualified financial advisers to engage in this as well.
Looking ahead, we are focusing on the signature piece of our platform, which is the licencing regime. It needs to be fit for purpose and support the way financial advice is going to be delivered for the future. Currently, the licencing regime does not deliver on that model and must change. We are aware that it is a change that can’t be achieved today and it is something that we have to keep working on.
Our commitment to helping all financial planners build sustainable and scalable practices over the long-term will be achieved through a consistent voice and courageous advocacy and a key part of this is through industry collaboration.
A UNITED VOICE
We continue to engage with the broader industry. I recently chaired a roundtable at our offices with the peak industry groups including the Association of FInancial Advisers (AFA), the SMSF Association, CPA Australia, the Institute of Public Accountants, Chartered Accountants ANZ, Financial Services Institute of Australasia (FINSIA), the Stockbrokers Association, the Financial Services Council (FSC) as well as staff from Treasury and ASIC.
Industry engagement is a key part of our advocacy plans as it ensures that industry bodies are aligned with our goals – affordable advice for all Australians and reduced costs for financial planners. It also ensures that these issues are amplified. The discussion by all stakeholders on how to ensure regulation is effective and efficient while also ensuring there is genuine choice and access to professional financial advice for all Australians is not only positive – it is a must for our future financial wellbeing.
Dante De Gori is chief executive of the Financial Planning Association.
