The Hayne royal commission’s exposure of sharp practices in financial services helped prompt governments into action to implement reforms that had been made in previous reviews, the Minister for Financial Services Stephen Jones said this week.
Jones addressed the conference dinner hosted by the AIOFP in Canberra and told them that work done by former judge Kenneth Hayne and his team during the royal commission into misconduct in the financial services provided a springboard for long-awaited regulatory action.
The review, which started last March after Allens Partner Michelle Levy was appointed to lead the review, was a recommendation from the royal commission on “effectiveness of measures that have been implemented by the Government, regulators and financial services entities to improve the quality of financial advice”.
Last month the minister launched the first round of draft legislation which covered one half of one of the streams of reform.
Jones told the audience of financial planners the evidence and case studies presented before the royal commission gave “momentum to do a whole bunch of things that had been recommended to government over many, many years and not done”.
“If you look at most of the recommendations of the Hayne royal commission – most of them had been made before,” Jones said.
“In fact, just about every one of the recommendations that Hayne put in his final report had been made by another review.”
Jones’ wide-ranging address covered the decline in the number of financial advisers in recent years, and he said he had committed to working through solutions to ensure experienced advisers were not bundled out of the sector.
He said the decline in the number of financial advisers in recent times was also necessary given that some of the people that were now out of the sector needed to be weeded out because of poor practices.
The government, Jones explained, was also working to try and grow numbers of advisers over time by looking at different pathways for qualifications so that there is a greater number of people able to provide much needed advice.
Jones asserted there was a need to find a way to close the gap between the consumers that need advice and their ability to access advisers with one part of this being recent moves to stop experienced advisers leaving the profession.
Another area of focus was the review of consumer protection measures that Jones said was needed to ensure that they met the objective.
This includes the review of the length and detail of Statements of Advice that Jones acknowledged had become bulky document that are unlikely to be read by investors.
He added SOAs had grown in length with detail that is designed to “protect somebody else’s backside” rather than help a consumer’s understanding.
“We can’t have a situation where statements of advice are more likely to be read in a courtroom and not a kitchen,” Jones said.
The minister told the audience that he will need their assistance in working out how to best slim down the statement of advice.
“We’re going to cut through all of that. We’ll sort something out. We’re going to need your help, and we’ll need the help of the licensees and product manufacturers and all that as well because they are a part of the problem,” Jones said, echoing similar comments made to the Financial Advice Association’s Congress held last week in Adelaide.
The minister is one of three speakers with a political background to appear on the conference program.
Former Treasurer Wayne Swan addressed a lunchtime function at the event and John Ruddick, the current member of the New South Wales upper house for the Liberal Democrats has also taken to the conference stage.
Hot topics debated in and around the conference sessions included red tape in the financial services sector, the pros and cons of people accessing superannuation funds to fund the purchase of a home, and which individuals ought to be able to call themselves financial advisers.
