Without wanting to pre-empt the findings of the Senate Standing Committee on Economics’ inquiry into the performance of the Australian Securities and Investments Commission, it’s fair to say that it’s not likely to conclude that ASIC has covered itself in glory – particularly in relation to Commonwealth Financial Planning Ltd (CFPL).
So the announcement in the Budget this week that funding to ASIC will be cut by $120 million over the coming five years is even more disheartening than it would be if funding were being cut from an over-performing regulatory agency.
And while all this is happening, the government has yet to tell us how it plans to handle a range of proposed amendments to the Future of Financial Advice (FoFA) legislation that a number of well-informed commentators fear will reduce consumer protection.
So it looks like we’re going to end up with a regulator already struggling to do its job, diminished further still, and overseeing legislation with weaker consumer protection provisions. That is not a combination to generate the trust and confidence that financial planners so publicly crave. But it creates an opportunity, too.
It’s obvious that the government does not care whether the public trusts you (all it cares about is that financial planning is “accessible”, by which it means “cheap”), and it cares even less whether the public is protected better from the industry’s crooks and charlatans. If it did care, it would not be right now so enthusiastically laying the groundwork for future failures.
(There is a whole other angle on this, to do with a government’s dereliction of its duty to protect its citizens from being misled, ripped-off and fleeced on the one hand, while on the other hand forcing them to pump money into a complex retirement saving system, which requires high-quality advice to navigate effectively. It seems to have been lost in this debate that leakage from the retirement savings system caused by fraud, incompetence and systemic corruption actively works against government policy and against the national interest.)
So it’s now painfully obvious that you must take matters into your own hands. It’s time to create for yourself the public trust you need, and to create meaningful consumer protection measures.
That is an industry-wide priority, and it’s urgent. This priority transcends vested interests. It transcends conflicted interests. It transcends self-interest. It transcends turf wars.
The opportunity is self-regulation. That’s actually what the government wants you to do. The Parliamentary Secretary to the Treasurer, Steve Ciobo, told a post-Budget breakfast exactly that, on Wednesday morning this week.
“The Government thinks that there is scope for the financial services industry, and for all the other industries, to self-regulate more,” he said.
So the ground has shifted. It’s moved on from the minimum standards prescribed in law, and the debate truly is focused on self-regulation. That has some clear and unambiguous consequences for every single financial planner.
It’s time to take responsibility, not only for your own actions, but for those of every single individual who calls himself or herself a financial planner. It’s about agreeing to and then adhering to high levels of conduct and behavior, and about being prepared to cop the consequences for breaching those standards.
It’s about being properly organised to do all of those things, and about working effectively with government and regulators to create a set of practitioner standards and expectations that meet the needs of all stakeholders.
And it’s about unapologetically keeping out of the game any individual who is not up for that.
That’s what self-regulation is. That’s what being a profession is.
