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.

Tahn Sharpe is a Sydney-based financial services journalist with a background in financial planning. He writes on advice, superannuation, investment, banking and insurance issues, is a certified SMSF Adviser and holds an Advanced Diploma of Financial Planning. Contact at [email protected]
2 comments on “Fix disciplinary body plan before it’s too late: FPA”
  1. Avatar Paul Bursich

    Too little, too late I am afraid. The FPA and the AFA missed their opportunity to advocate on behalf of advisers and have now been relegated to the sidelines. Irrelevant to their core constituencies and ignored and untrusted by government.
    I predict both these organisations will continue to struggle for relevance until they ultimately disappear.

  2. Avatar Jeremy Wright

    It is nice to see the FPA stepping up to the plate and starting to tell it as it is.

    The one thing we can understand, based on the current Life Insurance Framework, is if it is left to the Government and the Regulators, especially ASIC, then simplification will not be part of the equation.

    Dante calls out FASEA as an example, though the FPA and the AFA are still not listening to the facts, which are, that the current FASEA regime and requirements for unnecessary ongoing education, is a main cause of Risk advisers exiting the Industry.

    The FPA and the AFA, as a top priority, need to address this issue, as a case is building for a class action against the Government, with ASIC being front and centre as the main antagonist for the current regime that is killing the advised Life risk Industry.

    AMP is facing a class action and there will be a lot of interest in the media and from ALL disgruntled advisers who have lost their ability to practice or work profitably under the weight of unworkable and unfair restrictions of trade.

    The FPA and AFA have a small window to rectify their mistake and truly start representing risk advisers who pay them to properly analyse and make recommendations that is for the good of not only their advisers who pay them, but for the Industry and all Australians who will be negatively impacted by the exodus of advisers.

    Having the most important part of the Life Insurance Industry ( Retail advised Life Insurance ) collapse with no clear defense of the advisers and all Australians who are impacted, will drag the Associations into the resulting actions that will not end well for anyone.

    The advisers and Advice practices have been kicked in the guts continually and backed into a corner, so it is a no brainer to make potentially multi-billion claims against all those who have been involved in and helped create, the fiasco we are in.

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