The Stockbrokers and Investment Advisers Association has thrown its weight behind ending the “one-size-fits-all” regulatory approach to better recognise the different specialisations in the industry.
In its submission to the Quality of Advice Review it argued consumers want different advice for different needs which the regulatory environment needs to better accommodate.
“The current regulatory regime takes a ‘one-size-fits-all’ approach, which has been shown to be ill-suited to specialisations,” the submission stated.
The current system has led to a decline in adviser numbers, SIAA argued, which has led to less than 10 per cent of the Australian population having access to financial advice.
“The approach taken by policy makers towards the education and exam standards are a key reason for the decline in adviser numbers and this is important context for this review, as it illustrates why a ‘one-size-fits-all’ model can have disastrous consequences for the financial advice industry.”
SIAA chief executive Judith Fox tells Professional Planner there is consensus from the industry the one-size-fits-all approach doesn’t work.
“We’re not going to try and specify what it should like but just make sure it’s not a one size fits all approach because we’ve seen how that doesn’t work.”
New financial services minister Stephen Jones has outlined his support for specialisations, particularly when it comes to education standards.
“Whatever decisions are taken, it needs to be borne in mind there is this broad financial advice ecosystem and clients seek differing advice at different times from different specialisations,” Fox says. “We need to make sure the regulatory framework accommodates that.”
SIAA has been one of the few voices that has been completely against individual licensing which it believes doesn’t work for stockbrokers or investment advisers.
“The investment required for such firms is very different to the investment required for financial planning firms, as are the significant and complex capital adequacy requirements,” the submission stated. “SIAA cautions against any move to upend the regulatory framework of the Corporations Act to dismantle the AFSL system and force individual licensing upon all participants in the financial advice industry.”
The ALRC has also suggested a “rulebook” approach that could see different licensing rules for financial advisers and stockbrokers, but Fox isn’t willing to commit to the idea until a concrete recommendation is made.
“We will be very interested to see what proposal they put forward,” Fox says. “Whatever the ALRC puts forward we will consider with great interest.”