Minister for Financial Services Stephen Jones wants to avoid making the “same mistakes” as the previous government by not rushing through poorly implemented regulation.
In a pre-recorded video message played at the Stockbrokers and Investment Advisers Association Conference on Tuesday, Jones described the Quality of Advice Review report as a “thoughtful piece of work” which shone a spotlight on issues in advice he flagged before the election.
“We’ve seen the problems from the last government who rushed to implement things without working with industry with a clear goal in mind to help consumers,” Jones said. “I’m determined we don’t make the same mistakes.”
Jones had previously told the Professional Planer Quality of Advice Review Roadshow that financial advice reform had attempted to fix the same issue “about three or four times”, creating redundant layers of regulation.
At the stockbrokers’ conference, Jones noted the “massive change” in financial advice over the last decade due to “bad behaviour” in parts of the industry.
“Successive governments have sought to increase consumer protections and accelerate the important push towards professionalism in the industry,” Jones said.
“The same push has seen a significant exodus of advisers from the industry with only 16,000 advisers in the system to date, down from 28,000 a few years ago.”
While Jones noted regulatory change has lifted the standard of the industry and “seen bad actors leave”, he said it has not been without issues.
“The framework of the previous government would’ve pushed experienced advisers with an unblemished record back to university or out of the industry,” Jones said.
“Given the growing advice gap, this lacked policy sense and it also lacked common sense. I made an election commitment to recognise the experience of advisers with a clean record, without them needing to return to university. It should be noted this does not need to lower standards.”
The path well trodden
Additionally, Jones said legislation for experience pathway, which he confirmed will have no sunset clause, would be introduced into Parliament “shortly”. Consultation on the bill closed earlier this month.
“I see this bill providing us the time to manage the transition while we clean up education qualifications to facilitate and improve pathways for entrance into the system,” Jones said.
“I will be doing more work on the pathway for new entrants in the second half of the year.”
In an update following the Minister, SIAA chief executive Judith Fox said the association informed Treasury that members were actively making decisions over whether to stay in the industry.
“After the debacle of FASEA and the damage it caused our profession, it is really refreshing to see experience valued instead of denigrated,” Fox said.
“We’ve stressed many times that it is not a carve-out or watering-down of consumer protections, rather than the acknowledgement of the current education standards developed by FASEA do not work and the one-size-fits-all approach has been a complete failure.”
Fox argued SIAA members hold graduate and postgraduate qualifications, although those qualifications are suited to a profession in investing.
“Yet FASEA deemed them unqualified and it’s extraordinary to consider that someone with a Bachelor of Commerce, a Master of Applied Finance and a CFA qualification would be deemed unqualified,” Fox said.
“But that’s exactly what the FASEA view of the world was. FASEA only recognised recent degrees and only those in financial planning.”