Independent Teal MP Allegra Spender believes changing the Compensation Scheme of Last Resort, implementing advice regulatory reform and fixing the education standard are “urgent” fixes for the advice profession.
Spender, who won the eastern Sydney electorate of Wentworth after beating Liberal incumbent Dave Sharma in the 2022 Federal Election to claim the seat once held by former Prime Minister Malcolm Turnbull, told a Federal election summit hosted by the Financial Advice Association and the Institute of Public Accountants that she was committed to key advice reforms.
“If I am re-elected, what I’ve made my commitment in this space to do is to create a sustainable and fair CSLR because I think that’s really important, follow through with the Quality of Advice Review and DBFO,” she said.
“[And to] address the education aspect, in terms of how to make educational standards that are appropriate and don’t just narrow the pipeline of financial advisers. More broadly, work on flexibility and simplicity for small businesses and continue to beat the drum for tax reform.”
The comments from the Member for Wentworth come after the FAAA welcomed policy support from the Coalition but said it wanted more clarity from Labor, minor parties and independents on advice issues.
Spender is one of numerous so-called Teal candidates who are liberal-leaning economically but advocate for strong climate change action and socially progressive issues.
She said she has also been “pretty active” in trying to stop some of the “less good ideas” from the Assistant Treasurer and Minister for Financial Services Stephen Jones, including changes to the wholesale investor test and the provision of taxing unrealised gains in the Div 296 bill.
“I was a very strong advocate against that,” Spender said.
Spender said the decline of adviser numbers – from 28,000 at the start of 2019 to 15,600 today – is a fundamental issue that needs to be addressed.
“I understand that only 317 new financial advisers entered the profession last year which we know isn’t even the replacement rate,” Spender said.
“I acknowledge the need for us to fix this urgently. In this last term of Parliament, I’ve beaten a fairly well-worn path to the Assistant Treasurer’s door to talk about issues related to financial advice and tax reform because these are issues that matter to me, to the [local] community and certainly to the financial adviser community.”
Minister Jones announced at the Professional Planner Advice Policy Summit in February that he would expand the education pathway to include a broader range of degrees, which Spender indicated she supports.
On the CSLR, Spender said she has had members writing into her office and has been engaging the minister on the issue.
“The CSLR is there for a good reason which is to compensate losses incurred by clients of poor financial advice,” Spender said.
“However, this is a textbook case of moral hazard, ballooning in costs and [it] disproportionately effects small and independent firms. I wrote to the minister about this back in June expressing my concerns and I’ll be honest, I’m disappointed they haven’t achieved in moving further.”
Spender acknowledged the government had launched its review into the scheme but said there’s a “lack of urgency”.
“I’ll continue to fight for it, and I know it’s a barrier to attracting new advisers into the sector,” she said.
Spender had supported Tranche 1 of the DBFO legislation but said she shared the industry’s “frustration” on Tranche 2 which omitted changes that would remove the Safe Harbour Steps and introduce the much-maligned new class of adviser.
“I thought that Michelle Levy’s review was very thoughtful, well-timed and needed,” Spender said, referring to the QAR final report.
“If we’re going to deal with that fundamental problem we’ve talked about – which is how do people of modest means get advice can rely on – that is where some of that simpler financial advice can be of incredible use and that different class of financial adviser is really useful.”
