The incoming single disciplinary body has the potential to assist the advice industry, but only if the concept is restructured to eliminate a raft of regulatory duplications that will cost advisers time and money according to FPA chief executive Dante De Gori.
Speaking on the Professional Planner Best Practice Forum Digital webinar with Conexus Financial director of content Matthew Smith, De Gori said it was no given that the single disciplinary body (SDB) would benefit the industry.
“It has the potential to really play a pivotal role in the future of the financial planning profession,” De Gori said. “I really emphasize the word ‘potential’ because we have seen unfortunately in previous versions of reform where that potential has not been lived through.”
The SDB will only increase the burden on advisers in its current format, he explained.
“The reality is with a single disciplinary body we are getting an overlap; we are getting a duplication of the role of the licensee [and] we are getting duplication of registration… and that adds to cost.”
This is not the first time the FPA has highlighted the need for the SDB to actually reduce complexity for advisers, instead of adding to it. In its recent 5-year policy plan the FPA said the SDB should have “primary responsibility” for oversight of planners, and that it should assume a lot of the related functions currently performed by FASEA, ASIC and the TPB.
Advisers should only have to register with one government body, the FPA stated in the plan, which would provide a “single source of truth” and reduce red tape as well as regulatory cost.
De Gori warned that if the structure around the SDB isn’t fixed now the industry won’t be able to do it later. People may question the timing of the FPA’s 5-year plan, he said, but there is no time to waste.
“The timing is now,” he said. “If we don’t intervene with some of these recommendations to ensure that they are workable and ensure that they are as efficient as they can be then we are going to lose that fight and play catch up for years to come.
“In the absence of real regulatory reform to ensure the success of the single disciplinary body we are going to be in the unfortunate position where we are going to have an extra layer of complexity, an extra layer of regulation and a layer of cost,” he continued. “Unless something happens.”
In October last year De Gori said the FPA was left “disappointed” by the government’s backflip on the monitoring of advisers when Treasurer Josh Frydenberg announced that the Code Monitoring Body solution was to be replaced by a statutory SDB, as per the suggestion of Commissioner Kenneth Hayne. The FPA had previously led six associations in a consolidated “Code Monitoring Australia” bid for the original role.
De Gori said during the session that this was ultimately the right approach, given that a single statutory body has the potential to promote “cohesion”.
No more mister nice guy
The FPA chief was more direct in his industry commentary than usual, calling out FASEA for its lack of communication with advisers and reiterating the association’s preference for individual adviser registration by lambasting the current AFSL system.
New education standards were necessary, but FASEA’s handling of the standards’ implementation “left a lot to be desired”, he said. “To be very blunt they could have done that job a lot better than they did.”
While he stopped short of criticising FASEA CEO Stephen Glenfield – “the damage had already been done” – he accused the authority of failing to bring advisers on the journey.
“You want financial planners to come with the process, to want to lift standards because it’s the right thing to do, not begrudgingly,” he said.
As for licensing, the CEO pulled no punches in saying that the need for licensees to license advice is one of the “fundamental flaws” in our system.
“I think many licensees would agree; if you were to start this regime today, would you have licensing in place? I’d be very surprised if more than one or two per cent agree,” he said.
“Change is required,” De Gori continued, detailing the dropping numbers of advisers on ASIC’s registry and the fact that advice demand is “outstripping” supply.
“The undeniable fact is that if we don’t start taking control of our own destiny and plan for the future then there will be no future,” he said.