In March this year the Assistant Treasurer Josh Frydenberg hosted a roundtable to thrash out the issue of “consumer outcomes” arising from the multiple and overlapping regulatory reviews of financial planning currently underway.
On the one hand, Frydenberg managed to get together 20 different and disparate groups to discuss the issue – a triumph of the consultative process. On the other hand, however, Frydenberg had to get 20 different groups together to discuss just the consumer-outcomes aspects of reform. That, surely, must make the process more complicated than it could be.
“But there are lots of different interests,” Frydenberg says.
“There were people representing superannuation trustees. There were people who had an academic focus. There were people from the FPA [Financial Planning Association], people from the FSC [Financial Services Council], people who were from CHOICE and other consumer groups. And then there was the ABA [Australian Bankers’ Association] and the like. And we had industry super. So you had a great cross-section of representatives, all of whom have a legitimate voice and a legitimate stake in the outcome. So it’s good to share a table with them.
“I think the relationship has been very positive, and the fact that we could get a round table with more than 20 different groups represented for a couple of hours to have a discussion about the future of the financial planning industry was a sign of positive engagement.”
Frydenberg is consulting with the industry on at least three specific fronts: the Financial System Inquiry (FSI); the Parliamentary Joint Committee on Corporations and Financial Services’ recommendations on lifting the professional, ethical and education standards of financial planners; and the Review of Retail Life Insurance Advice – the so-called Trowbridge report.
He says he wants to conclude consultation with the industry and put forward a regulatory roadmap that represents a pragmatic and workable compromise for both practitioners and consumers.
His message to the broader industry is direct: not everyone is going to get everything they want; the industry needs to accept some compromises; and it needs to be prepared to work with governmentto implement changes he says will be transformational for the sector. And that includes the banks.
“I have welcomed the banks’ unilateral actions – they themselves have elected to raise the standards within their own operations, and that’s to be welcomed,” Frydenberg says.
“But the banks, like all the other players, need to buy in to our final model, once released.”
Respect for practitioners
Frydenberg says the reforms the government will ultimately put forward will be underpinned by respect for financial planning practitioners and the role they play.
“I really respect people in the financial planning industry,” he says. “They make an important contribution to dealing with people’s life savings, and we need to get more people taking up financial advice, more people seeking affordable and accessible advice. And at the same time we’ve got to deal with some of the product and advice failures, and strengthening the system so it’s more robust and sustainable going forward.
“But we are going to undertake transformational change.”
Keeping track of many moving parts is integral to being able to reach a workable consensus on the issues that the financial planning industry currently faces. Consensus is important to Frydenberg – it may yet come to be regarded as a defining characteristic of his tenure as Assistant Treasurer, and it’s one that leaders and representatives of the financial planning industry say they value.
“We’ve had a very constructive and valuable dialogue with those industry bodies to date, and what I’ve appreciated is their public tone, which has been one of partnership as opposed to adversarial confrontation,” Frydenberg says.
“That’s always very important.
A lot of them commission reports, like Trowbridge, or commission research into superannuation and other areas, which provide valuable sources of information for the government, in addition to what we rely on from Treasury and other government agencies.”
Read the full July 2015 Professional Planner cover story, “Finding a Way”, as a PDF, in which Frydenberg delivers a direct message to financial planners, explains why he believes consultation means credibility, and calls on both sides of politics to support reform of financial planning.
