Shail Singh (left) and Steve Prendeville

Half a decade has passed since the conclusion of the damning Hayne royal commission and the advisers who stayed the course during the sector’s lowest point are reaping the benefits.

The royal commission led to a raft of changes to the industry, including the removal of grandfathered commissions, originally left intact by the Future of Financial Advice reforms, along with the controversial fee consent regime, reference checking and breach reporting requirements.

Additionally, the Financial Services and Credit Panel, Compensation Scheme of Last Resort, and the Quality of Advice Review were all outcomes of Hayne’s recommendations.

Forte Asset Solutions founder Steve Prendeville says the impact of the commission was unprecedented.

“Greatest change the industry has ever seen, certainly in my 35 years,” Prendeville tells Professional Planner.

“What we saw was the brand damage and the following period of actions and payments/damages from the banks. We saw the great banks exit and we saw the great exodus and diaspora of advisers.”

However, data taken years after the commission shows the quality of advisers has improved. Prendeville notes that Adviser Ratings’ 3Q21 ‘Musical Chairs’ report 14.8 per cent of current advisers are rated by consumer ratings via the researcher as “exceptional”, compared to just 3 per cent of advisers who have left the industry.

More than a quarter (26.9 per cent) of current advisers are rated in the second-highest band of “very good”, compared to just 11.1 per cent of advisers who have left.

Conversely, 62.5 per cent of advisers who have left the industry had a score of either “fair” or “poor” – the two lowest categories – while only 37.5 per cent of current advisers were rated as low.

AFCA lead ombudsman for advice Shail Singh says the number of advice-related complaints has reduced, with the drop in the number of advisers and market conditions being factors, but also because standards have improved.

“From my observations it is the latter that’s driving it,” Singh says.

“The fourth aspect is that [Internal Dispute Resolution] processes have improved in this industry and I’m noticing a lot of the big financial firms are now developing pretty robust IDR [systems].”

Additionally, Singh says complaints about fees for no service, a key royal commission finding, have also reduced.

And while the Adviser Ratings report used quantifiable data to back its view that the quality of advisers has improved, Singh says anecdotal evidence also supports the finding.