As far as Shadow Minister for Finance Jane Hume is concerned, the financial advice industry had achieved professional status. She said so repeatedly at Monday’s Conexus Financial Political Series lunch in Melbourne, in partnership with BT.
“We were always on a journey that we wanted to get to, which is where we are now: the people in this room are professionals, [they] are educated, they are doing what we need them to do, [which is] making sure that the Australian population is well-informed when they make decisions [to] take control of their own financial futures.
“The industry has restored trust – and for that you should pat yourselves on the back.”
But some of the questions from the floor might make the former financial services minister think twice about her conviction. Multiple practising advisers voiced their anger over their perceived treatment by the previous Coalition government.
Peter Johnston of the Association of Independently Owned Financial Professionals demanded an apology for the implementation of the FASEA regime, under which thousands of professionals headed for the exit. When Hume, and her colleague Shadow Treasurer Angus Taylor, made clear their unqualified support for all 22 recommendations of the Quality of Advice Review, one adviser yelled out: “what about LIF?” Another asked about the legality of the government’s ban on grandfathered commissions. The underlying inference was clearly that the outlawing of commissions was regrettable and unfair.
On a human level, the emotional response from some advisers is understandable. They have had their business models overhauled over the past 20 years, and a string of new and sometimes unreasonable requirements thrust upon them, such as overlapping and redundant fee consent rules, and a rising levy just for the privilege of being regulated. They have seen thousands of peers head for the exits and lived through a public scorning in the Hayne royal commission. I’m not a trained psychologist, but some of the dialogue seems possibly consistent with post-traumatic stress. These advisers should be listened to and responded to.
But equally, they need to come to terms with the fact that life is never going back to the way it was. Investment commissions have no support on either side of politics, and probably not among the general public either. While insurance commissions at the rates agreed to under the Life Insurance Framework seem to be safe for now, there are many Labor MPs and consumer critics who will not rest until they are outlawed. In fact, the campaign against them arguably just had a win, with the appointment of Choice chief executive Alan Kirkland to the powerful role of ASIC Commissioner from November.
Moreover, those still pining for the old days need to realise that professionalism is not just some goal held by politicians, or consumer advocates or some publications like Professional Planner (which has advocated for higher professional standards and against conflicts of interest for 14 years). It is an essential precondition of any deregulation that may come.
The argument, well prosecuted by the Financial Services Council in recent years and accepted by both Labor and the Coalition, is that the advent of the best interests duty, the ban on investment commissions, and education and ethics reforms have resulted in professional status being achieved.
That is the logical starting point of any conversation about winding back red tape – let alone the more radical reform being proposed by Michelle Levy’s QAR. If there is any question about that status, then it will be very hard to justify any kind of red-tape reduction, especially for a Labor government.
Every adviser should be free to speak their truth to power, and criticise current and past governments if they wish, including at Conexus Financial events. Part of our reason for hosting the Political Series is to bring together the varied and disparate voices in financial services and create a dialogue with policymakers, and that includes small business owners who may feel left behind.
But rather than vent their frustration and dismay, perhaps a more constructive use of their energy would be to educate politicians of all stripes about the challenges they face and value they create. Or, better yet, share an anecdote about your everyday client work that may resonate and make them think differently.
“When I started working in this industry…it really was a place for cowboys,” Hume said. “But the place the industry is in now has allowed us to say how can it best service the people that need advice the most?”
Let’s not give Canberra any reason to think otherwise.
