The Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, has highlighted the importance of scaled advice in getting the industry “back off life support” after the pandemic and urged ASIC to be more proactive in rolling out fintech solutions that reduce red tape for advisers.
Speaking in a link-up with Conexus Financial chief executive Colin Tate at the Professional Planner Digital Licensee Summit this morning, Hume said the entire financial services industry needs to do things “differently”.
“We’ve got to reduce the burden of red tape, improve productivity and lift the output per worker while maintaining the quality of the output,’ Hume said. “That’s going to mean a far more prominent role for single-issue advice.”
The minister highlighted ASIC’s April regulatory amendment allowing advisers to provide advice on early access to super under records of advice (ROA) as an example of the type of low cost, low compliance advice the industry should be looking to provide.
Continuing the theme, Hume spoke of the government’s desire to embed ROAs more heavily into the advice process at the expense of lengthier and more expensive statements of advice, much of which she called “boilerplate”.
“There’s probably greater roles for ROAs and we’ve seen that,” she said. “SOAs are potentially too large and cumbersome and they’re not read by clients, there’s better ways of doing business.”
In a candid exchange, Hume acknowledged the government’s own role in streamlining the industry and pushing to reduce red tape, saying it needed to focus more on “identifying opportunities of overlap and the duplication of regulation”.
She also flagged the need for the corporate regulator to work with fintech providers to bring next generation tools to advisers, which she said has the potential to be a “potent” multiplier of productivity.
“It’s going to involve the regulator having a much greater role, they’re going to have to be much more forward leaning in their approach to the roll-out of technology that helps advisers do their jobs,” Hume said.
Part of ASIC’s role will be “regulating the algorithms”, Hume continued, and being ready to approve solutions as they come to market. In turn, this will make ASIC’s job easier as well.
“That means they can spend less time auditing after the fact,” she said. “Facilitating the rollout of those algorithms for advisers means there’ll be much greater consistency available in the delivery of quality financial advice.”
ASIC has a ‘regulatory sandbox’ available for fintech companies to test certain products or services for up to 12 months without an AFSL, and chair James Shipton has previously flagged the role of the regulator in working with these companies to bring tools to market.
Understanding the impediments
In a subsequent session a the licensee summit, ASIC executive director Joanna Bird said it was “not surprising” there was concern about the provision of affordable, quality advice given the institutional exodus from the industry. Findings from the regulator’s ‘unmet advice needs’ project, she said, confirm Hume’s assertion that people are looking for cheaper, less complicated advice.
“Our research tells us what consumers want is scaled affordable advice, and we know – because industry tells us – that industry has great troubles delivering scaled and affordable advice,” Bird said.
“So we want to understand the impediments to delivering that scaled and affordable advice and to what extent those impediments are something the industry or ASIC or both bodies can deal with together.”