Being in government isn’t a fun or easy job. In a politically divided world, the best-case scenario is only 50 per cent of people hate you.
Politicians have the choice to either carve out their niche and fight for their base or play a pragmatic negotiatory role in the centre.
Despite his background as a union lawyer and long-time Labor member, Minister for Financial Services Stephen Jones sought that middle ground, positioning himself as a saviour of financial advice.
Before the 2022 Federal election, he said advice was one of the three parts of the financial services sector the Albanese government would prioritise and he described it as being in a “meltdown”.
Jones argued there needed to be a government with a clear vision, but most importantly, one that could offer certainty.
“In the financial advice area the whole market is cooked,” Jones said at the RIAA Conference in 2022. “It’s been a meltdown. Poorly managed change on behalf of the government. There’s an urgent job of work that needs to be done.”
Part of Jones’ motivation to push professionalism in advice was the collapse of Astarra/Trio Capital that saw constituents in his electorate of Whitlam lose millions due to conflicted advice, but since the introduction of FOFA and many of the Hayne royal commission, Jones’ mission had now steered towards cleaning up the “hot mess” of over-regulation in the advice sector.
But being in the Labor party means being associated with the power of the industry funds and the power brokers that lead them, whether a philosophical view is shared with them or not.
Jones tried to openly push back on this – it was back in January 2022 that Jones stated he was “intensely uncomfortable” with the appearance of vertical integration popping up via super funds.
“There’s been those from the industry funds who have looked to me and would like to see us relax some of the rules around intrafund advice – that we should allow funds to have vertically integrated arrangements,” Jones said.
“This is not a policy announcement but I’m telling you that I’m intensely uncomfortable with a model like that.”
These words might come back to haunt him, depending on what the next tranche of legislation might provide in the coming months.
While the boundaries and charging mechanisms for advice provided by qualified advisers are yet to be specifically outlined, there were corners of the advice sector raising concerns about the potential conflicts of interest and unlevel playing field, and this was well before the very real slap in the face to professional advisers from the “qualified advisers” announcement, which forced the minister into damage control.
But polarising legislation and announcements have done little to mitigate industry concerns that advice will become more affordable. It would be a shame for Jones’ tenure to fall under the weight of a bungled QAR, rather than progress in the sector.
While parts of the industry have been impatient over a perceived failure to deliver “quick wins”, Jones has at least delivered the controversial experience pathway, giving a lifeline to advisers who would’ve rather left the industry than complete tertiary qualifications.
At a less impactful level, he tweaked the adviser exam to open the field to any candidate to sit, while also making it multiple choice to streamline the grading process.
Neither change came in with any gusto. The experience pathway was consulted on multiple times (once by the previous government) and legislation didn’t pass until the second half of last year. The exam changes came into effect for the first sitting of 2024.
Since then, the legislation that has been tabled to Parliament has been rife with controversy, with issues over how changes to risk commissions, fee consent, and deducting advice fees from super member accounts have been handled.
Whether or not these were the quick wins the minister was aiming to strive for are another matter, but for the advice sector it isn’t enough.
Failure to keep costs down with the ASIC and CSLR levies has only exacerbated the cynicism. While both levies are still dwarfed by other expenses such as professional indemnity insurance and licensee fees – and will ultimately be passed on to consumers in a high demand environment – it’s a bad look for a government. It doesn’t help that Jones’ response last year to the criticism that dealing further with the issue is a matter of bandwidth gave the opposition plenty of ammunition.
The financial services portfolio covers more than just financial advice and the superannuation sectors and isn’t easy to manage.
Outside of financial services, Jones has been active in anti-scam work. Just days before the QAR legislation was tabled in Parliament, the minister was approving an ACCC recommendation for new safety standards for bicycle helmets.
It’s an eclectic mix of responsibilities, and for a sector that doesn’t rank high on electoral importance, it has been a thankless task.
