Changes announced on Wednesday that will cut compliance and consolidate oversight for advisers are just the start of a considered and consultative process designed to get the industry back on track, according to Jane Hume.
“Certainly, it’s a step in the right direction,” the Assistant Minister for Financial Services, Superannuation and Financial Technology tells Professional Planner. “But it’s not the end of the journey.”
The champagne will stay on ice while the industry continues its overhaul, but the elevation of ASIC’s Financial Services and Credit Panel into the role of Single Disciplinary Body (at FASEA’s expense), plus the merger of Financial Disclosure Statements with Ongoing Service Agreements, are being broadly celebrated as positive steps towards streamlining the advice sector.
According to Hume these kind of efficiency plays will continue to be implemented alongside other scheduled reforms.
“You know, really it’s about implementing the Hayne Royal Commission recommendations but also using that to streamline the regulatory requirements that are most burdensome for advisers,” she says.
The Senator reveals her team canvassed “far and wide” in its research before making a call on Wednesday’s legislative amendments, which also included new non-independence disclosures and restrictions on the payment of (non-intra-fund) advice fees out of super – both key planks of Hayne’s reforms.
Lobbying efforts from the Financial Planning Association and the Association of Financial Advisers played a role, she said, as did the work of the SMSF Association.
Yet she attributes most of the consultation efforts to the advisers themselves.
“There were actually a lot of roundtable consultations with advisers directly and many who were speaking to their members who were then speaking to me,” she says. “And that goes for members of the opposition as well.”
The advice sector, she explains, doesn’t lack for people willing to offer input into how the industry should be run.
“Even though it’s quite a fractured industry in some ways there are a lot of voices.”
Hume knows there is a mountain of work ahead. People will want to know how the FSCP – a loose collection of industry stakeholders intermittently brought in to consult on banning orders – will morph into an industry disciplinary body, and how Treasury will source the expertise required for its new role as torchbearer for the Code of Ethics’ Standards.
But the immediate challenge is getting the proposed compliance changes through the House of Representatives and then the Senate in the new year. Fortunately, Hume says she doesn’t anticipate much contention – implementing recommendations from the Hayne Royal Commission is a “largely bipartisan exercise,” she adds.
“There might be some amendments in the margins but I would be expecting opposition support on this,” Hume says. “They’re also hearing from their advisers in their constituency that this industry is crying out for a reset in the financial advice sector.”