The Financial Advice Association Australia has outlined five policy tenets to the incoming government, following the call from the Financial Services Council for a financial service “razor-gang to cut red tape”.
Along with red tape reduction, the other suggestions are fixing the Compensation Scheme of Last Resort, adviser access to the ATO portal, completing the Delivering Better Financial Outcomes reforms, and supporting new entrants to the financial advice profession.
The five items were developed following a survey canvassing member views on what the association should prioritise for the next government.
The FSC had suggested a “red tape razor gang” among its federal election priorities, which also included changes to the CSLR and an expanded education pathway.
Sarah Abood, CEO of the FAAA, said that despite the Hayne royal commission being well-intentioned, legislation introduced since then has “not hit the mark”.
“It has ultimately served to drive up the cost of advice and made it more difficult for people to get the advice they need at an affordable price to manage their increasingly complex financial needs,” she said in a media statement on Wednesday.
The Quality of Advice Review, recommended by the royal commission to review accessibility and affordability of advice three years after its final report had been released, suggested several reforms to reduce the regulatory burden for professional advisers.
The Albanese government’s response to the QAR evolved into the DBFO which has so far only legislated some of the recommendations from the review.
Further – and incomplete – legislation was introduced last month, which the FAAA described as “disappointing”, in a scathing assessment of what was put forward for public consultation.
Along with completing the DBFO, the association has also called on the government to mandate a standardised fee consent form.
Additionally, the FAAA has recommended to the government the CSLR levy be capped at $10 million per subsector.
It also demanded financial advisers stop being asked to “[pay] for product failures”, alluding to Dixon Advisory and United Global Capital which have dominated much of the CSLR compensation.
The Australian Financial Complaints Authority has been clear that the matters it makes determinations on are advice failures due to lack of diversification, but in the cases of Dixon and UGC the issue was conflicted advice models.
Abood said the compounding red tape and increased levies are suppressing interest in joining the profession.
“Paying a levy for the mistakes made by others before you even started in the profession is clearly a deterrent to becoming a financial adviser,” Abood said.
“It is essential that more people are encouraged to become financial advisers, to meet the growing need of Australians for professional, quality advice to manage their financial situation.”
In addition to cutting red tape, the association has called for greater support to new entrants including a flexible education standard, and financial support for professional year (PY) candidates and the cost of the adviser exam.
Minister for Financial Services Stephen Jones announced an expanded education standard at the Professional Planner Advice Policy Summit, which will allow a broader recognition of tertiary degrees.
The FAAA also proposed the government offer $10,000 payments to advice firms hiring PY advisers, along with subsidising the advice exam in its pre-budget submission.
