The corporate regulator has formally ruled a line under one of the most shameful chapters of the financial advice industry’s history, issuing a final update on remediation paid by the big banks, AMP and Macquarie for charging fees for no service and for non-compliant advice.

ASIC said last week the six institutions had collectively paid or offered $4.7 billion in compensation, covering advice going back eight years and, while it won’t be issuing any more formal updates on this program, it will continue to monitor how they go managing their remediation programs generally.

It’s not only the big six that ASIC will be monitoring in future, and the regulator has previously reminded all licensees of their obligations to run efficient remediation programs.

It’s coincidental but timely that ASIC should be ruling off the biggest remediation program in history just as a new round of consultation kicks off on changes to financial advice regulation – regulation that was introduced at least in part in response to the issues that led to the need for remediation in the first place.

ASIC’s announcement, coming at the time it does, serves as a salutary warning of what can happen when large-scale advice providers get things wrong, either intentionally or otherwise, and the adverse consumer outcomes that produces.

In the end no one won from what happened. Large numbers of consumers had a poor experience of advice, which continues to feed into mistrust of the industry; and institutions – which under other circumstances could have been key players in the aim of getting more affordable advice to more people – withdrew from the industry and saw years of profits effectively wiped out.

Consumer protection has been a key battle line in the debate over the Quality of Advice Review recommendations, although an open letter this week from a coalition of consumer groups has suggested they have become more comfortable with simpler disclosure requirements and the removal and safe harbour steps. On one hand the objectives of improving the affordability and accessibility of high-quality financial advice are laudable; but on the other hand we’ve just been reminded once more of why strong consumer protections are so desirable.

The fact that the big four banks have withdrawn from advice is somewhat beside the point when it seems reasonably likely that if the advice review recommendations get up in total then they may well soon be back into it, only with a field force of non-relevant providers operating with a lesser level of regulation than applies to relevant providers.

Simplifying disclosures and removing safe harbour might help lower the cost of delivering advice somewhat – although as Professional Planner has pointed out – a lower cost to deliver advice may not necessarily translate into a lower cost of advice to consumers – but they’re unlikely on their own to suddenly spark a massive increase in the supply of advice.

It’s been suggested, most recently by opposition financial services spokesperson Stuart Robert, that consumer groups’ protestations are unfounded and consumer protection will be supported by the professionalisation of the advice industry. Part of that professionalisation requires adviser to adhere to a code of ethics.

But under Levy’s recommendations only relevant providers would be required to adhere to the code. In any case, even those who’d be classified as relevant providers are still agitating to have at least one element of the code, relating to conflicts of interest, “clarified”.

They don’t really mean “clarified” because what it means is actually pretty clear. Standard 3 of the code says an adviser must not act if they have a conflict of interest. They want it “clarified” so they can continue to act when they have a conflict of interest.

Eliminating conflicts of interest has been, and must continue to be, central to professionalising the advice industry. It’s a basic tenet of consumer protection that the consumer’s interests come first. We’ve seen what happens what that’s not how advice is delivered, and we can ill-afford to go back there.