On Wednesday, Treasurer Josh Frydenberg announced that the government would streamline the number of bodies involved in the oversight of financial advisers by winding up FASEA, expanding the role of the Financial Services and Credit Panel (FSCP) within ASIC and moving other functions of FASEA to the Treasury, as previously reported by SMSF Adviser.
Chartered Accountants Australia and New Zealand (CA ANZ) advice leader Bronny Speed said that after three years of advocacy to reduce the regulatory burden financial advisers face, the accounting body supports the government’s decision to consolidate FASEA and ASIC functions.
“This is in line with our request to Senator Jane Hume in October that there is a need for a reduction in multiple licences, registrations, regulators and levies for financial advice to be more affordable to everyday Australians,” Ms Speed said.
“This reform is hopefully the start to a reduction in regulation so that more individuals and small businesses can be helped on the road to recovery from the COVID-19 pandemic.”
Ms Speed said it will be more important than ever for members to highlight their pain points to ASIC as it starts to shape the future for financial advisers.
She noted that ASIC recently released Consultation Paper 332 which is focused on promoting access to affordable advice for consumers and further understanding the current issues and impediments around delivering affordable, quality personal financial advice, particularly in relation to limited advice.
“ASIC’s consultation signals a critical milestone as, unlike most consultations, ASIC is seeking input directly from members,” Ms Speed said.
“Following our numerous government submissions, meetings with ministers and advocacy to regulators, this is an opportunity for members to drive further change so that more Australians can afford personal financial advice.”
The SMSF Association also supports the decision which will result in the Treasury overseeing the education, training and ethical standards for the provision of financial advice, while ASIC will be responsible for disciplinary action and administering the exams for entry to the profession.
SMSF Association chief executive John Maroney said it was a welcome initiative with ASIC having the expertise to adjudicate on professional misconduct and the Treasury having the appropriate standard-setting skills.
“The association has long held the position that financial advice industry regulation needs to be streamlined to reduce unnecessary complexity, and this reform meets this objective,” Mr Maroney said.
“The current regime sees advisers having duplicate obligations, multiple regulators and multiple standards that result in unnecessary complexity and cost. This is forcing many professional financial advisers to question whether they should continue to provide advisory services at a time when consumer need for financial advice has never been greater.”
While Mr Maroney acknowledged the work done by FASEA in improving the education, training and ethical standards in the financial advice sector, he said that streamlining the number of bodies involved in oversight of financial advisers is absolutely necessary to reduce complexity and cost for advisers.
“We see this initiative as further strengthening the oversight of financial advisers while at the same time simplifying the regulatory framework governing the provision of financial advice,” Mr Maroney said.
Kicking the can down the road
CPA Australia general manager of external affairs Dr Jane Rennie said the government’s decision to disband FASEA was a good first step, but more needed to be done to reduce the regulatory burden on advisers.
“Practically, this decision does little to address overlapping, duplicated and sometimes conflicting regulatory requirements on financial advisers,” Dr Rennie said.
“Transferring responsibilities from FASEA to ASIC and Treasury, without wholesale regulatory reform to address these issues, is akin to kicking the can down the road.
“The government must do more to address the causes of the regulatory and compliance burden on financial advisers. Until they do, we will not solve the problem of advice affordability and accessibility in Australia.”