Deborah Kent (left), Mohita Zaheed and Sean Graham

Regulation has been built off the presumption of guilt, according to Treasury, and the Quality of Advice Review presents the opportunity to build a balanced regulatory system.

That’s the assessment of Treasury financial system division assistant secretary Mohita Zaheed which shows there is some support within the government for advice review lead Michelle Levy’s proposals.

Speaking at the Oreana Financial Services Conference in Sydney on Thursday morning, Zaheed described the proposals as a big step change from the current system.

“The system we have is quite interesting because it has been developed all of the back of misconduct, scandals and the history of mis-selling, and the GFC,” she said.

“We’ve had a system which has been built off the presumption of guilt in some senses, rather than coming at it as you would design an ordinary system.”

Zaheed praised Levy for developing a regulatory approach that better manages the trade-offs between consumer protections, innovation and competition.

“We have a profession, we have highly competent and regulated individuals,” Zaheed said.

She noted the anxiety from consumer advocacy bodies and other stakeholders who consider the changes as being “scary”.

“We’re going to have to confront that, and the government is going to have to confront that when the review is done,” she said.

Broad consensus

Asked about what the industry agrees on, Zaheed said there is broad consensus around Levy’s proposal to eliminate unnecessary processes.

She named the removal of Statements of Advice (SOAs) and fee consent as a couple of examples.

“ASIC don’t want SOAs as we have them. There is broad consensus that [fee consent] is a debacle.”

Integra Financial Services principal Deborah Kent said she’s an advocate for letting using their professional judgement in everything they do, but the former FASEA board member referred to her experience dealing with the industry that suffered from significant trepidation towards following principles-based regulation.