With the ongoing noise about the future of car manufacturing in Australia, I have more than once considered how this will play out in our unique V8 Supercar racing competition – in particular, the showcase event, The Bathurst 1000. I remember growing up in Perth and getting up at 5.30am to watch the pre-race broadcast and count down to the start of the Great Race (and I’m not even a rev-head).
Read Mark Rantall’s views on why the FoFA amendments do not undermine consumer protection
Read Robbie Campo’s views on why the FoFA amendments undermine consumer protection
There is something very Australian about the Ford versus Holden fight for supremacy. Scattered throughout these memories were the numerous prangs, the high-speed collisions and the life-threatening accidents. Drivers would emerge from cars crumpled into tyre walls; and every year, commentators would talk about the safety standards employed on the track and in the cars, and the overall remarkable safety record of V8 racing.
In financial advice, we have a chequered safety record, peppered with memories of large-scale failings – some of which, with hindsight, we can all see were accidents waiting to happen. Our clients are therefore reliant, for their own protection, on a safety net that lives in legislation and breathes within a regulatory framework, controlling how we in the financial advice industry do business.
I think we all acknowledge that consumer protection is essential and helps support public recognition of the developing professionalism of the personal financial advice community. The question being debated now is what level of protection strikes the right balance between averting disaster and over-protection that will ultimately push the price of accessing advice – and the convenience of getting advice – beyond where people see value.
In everyday driving, we have seen safety standards continue to improve; yet it was the introduction of compulsory seat-belt wearing that had the greatest effect on reducing road trauma. As the merits of this regulatory change were debated, we can be sure that some argued against it on the grounds that
it would increase costs in manufacturing vehicles. And others may have said things like: “Well, if we’re going to have seat belts, why don’t we make everyone wear a racing driver’s harness and crash helmet as well?”
Of course, this would have been overkill. The additional costs involved in equipping new cars and the loss of convenience for the driver and their passengers outweighed the benefits of the extra protection.
The current debate over the removal of the “other steps” clause in the best interests duty legislation – section 961B(2)(g) of the Corporations Act (known as “part g”) – is subject to some distortion. Its inclusion may be likened to requiring the average motorist to wear a full racing harness and helmet: it may provide further protection in extreme cases, but at what cost and loss of convenience for the average client?
So, we should embrace an amended best interests duty for the effective seat-belt protection that it provides for every client receiving financial advice.
Like V8 Supercars, we have a world-class product. Measures that continue to raise the bar for the Australian advice market are to be encouraged where they add net value to all participants. Regulation that pushes costs beyond the additional value erode the market. And in Australia, the last thing we need is fewer people receiving quality financial advice.
The car manufacturing industry is in demise in Australia. As a nation, we can’t afford to have the advice market go the same way.
The advice you provide is too important to the future of your clients.
For those with a view that the removal of “part g” sets back or delays the pathway to becoming a recognised profession, I would say this: It will be the attitudes and behaviours of financial advisers that will ultimately determine when the public sees us as a profession, not legislation and over-regulated protection.
The ball is in our court, not that of the lawmakers. Provide your advice as if every client in the passenger seat is your own child, and make sure you fasten their seat belt. You owe your clients that level of protection.
