By the time this goes to press, ASIC will presumably have published its discussion paper on the question of regulation of advice. Professional planners labour under the burden of elaborate regulatory requirements governing disclosure and documentation. To some extent this regulatory plethora is self-defeating, in that it generates so much paperwork and unproductive activity that costs are driven up and advice is pushed beyond the reach of those who need it, or is financed by exorbitant and market-distorting commissions.
Worse still, effective disclosure is obscured by the sheer weight of material. What must be remembered, however, is that most of this regulation, while somewhat ad hoc, has been built up over many years in response to low standards of advice and endemic malpractice. The chronic failure of the industry to effectively professionalise and regulate itself has contributed to costly and dysfunctional imposition by statute.
Effective regulation is difficult precisely because the system is so inherently compromised and conflicted by commissions, rebates and soft dollars. Reform must therefore be approached in one of only two ways. Either there must be an unequivocal requirement for advisers, planners and accountants to act in the best interests of clients, and an eradication of commissions from their dominant position in the industry.
This would allow supporting regulation to be correspondingly light in its touch. Or reform must proceed very cautiously indeed, respecting the overwhelming need for consumer protection while mandating clearer, more standardised disclosure and enhancing the ability of superannuation funds to inform members regarding the features of their scheme and the system as a whole. {mos_fb_discuss:20}
