The German government recommends a speed of 130 kilometres per hour on autobahns but there is no official speed limit. Drivers self-regulate and determine their own speed.
In Australia, on the other hand, strict speed limits apply; typically around 110 kilometres per hour on freeways.
Australians have been conditioned to believe that the higher the speed limit, the greater the risk of accidents and casualties but a 2020 report by the Australian Department of Infrastructure & Transport found Australia recorded a higher number of road fatalities than Germany.
Looking at the road safety performance of 36 Organisation for Economic Co-operation and Development (OECD) nations, Australia was ranked 20th with 4.26 motor accident deaths per 100,000 population compared to Germany’s tenth place with 3.27 motor accident deaths per 100,000 population.
The data shows that with the appropriate guardrails, wider risk parameters are not necessarily more dangerous.
Conversely, conservative policy settings do not guarantee fewer accidents.
As the QAR final report stated, the current regulatory framework “has not even proved effective in preventing consumer harm”.
According to the QAR, existing consumer protection legislation already provides the necessary guardrails but must be regulated more effectively.
Under current laws, financial services providers are obligated to act efficiently, honestly and fairly, and only design and distribute financial products that are likely to be suitable for their customers. They cannot accept conflicted remuneration for investment products and must act in their clients’ best interest. The law also prohibits the unsolicited selling of financial products, and there are significant breach reporting obligations and penalties for non-compliance.
Within those broad and reasonable parameters, advisers can determine how they go about their business.
They can innovate and try new things to reach more people. They can expand their value proposition and invest in systems and technology to drive efficiencies.
Unfortunately, the advice industry’s inability to independently interpret legislation has led to an over-reliance on regulators, licensees and lawyers for guidance, despite these groups having a vested interest in making things complex and a tendency to focus on everything that might go wrong.
The result has been a highly prescriptive regulatory framework and NPCs who robotically follow the rules even if it defies common sense.
There can be no better example of this than the increasing number of advisers sending clients elsewhere because they can’t find a way to help them.
However, the recent announcement by the Minister for Financial Services Stephen Jones of the government’s plans to implement 14 of the 22 recommendations made in the QAR final report, is an opportunity for advisers to become ‘Player 1’ and make decisions to gain a strategic competitive advantage.
With the regulatory burden set to ease, advisers will have greater autonomy to use their minds, training and experience to make smart, calculated moves to advance.
While the government is taking its time to consider the remaining recommendations, entrepreneurs should not be deterred from taking greater risks to serve their clients better.
QAR has been important for many reasons, the least of all being that it has challenged the industry to think outside the box and reimagine the future. It has painted a picture of what can be achieved with broader risk parameters.