The IPA wants the Quality of Advice Review to make bold moves towards meaningful reform.
IPA calls for ASIC’s powers to be stripped
Stripping away some of ASIC’s powers is essential to step out of the “quagmire” of complexity in its legislative instruments, the IPA said, and make financial advice more accessible.
IPA group executive advocacy and policy, Vicki Stylianou, said even lawyers were finding ASIC’s powers “overwhelming” and multiple reviews had failed to achieve meaningful reform.
The call came at the recent SMSF Association Technical Summit in a panel discussion about the regulatory regime around financial advice and the need to address the unmet demand from consumers.
The IPA submission to the Quality of Advice Review took its lead from an interim report from the Australian Law Reform Commission last November “and honed in on ASIC”, Ms Stylianou said.
“What they were saying [in that report] was the fact that ASIC can make notional amendments through mostly legislative instruments and there’s about 100 of these instruments and it has led to overwhelming complexity. It’s a quagmire, and it’s made the law inaccessible,” Ms Stylianou said.
Based on discussions as part of the ALRC review, Ms Stylianou said it was clear that even lawyers and judges were struggling with the laws in this area.
“What hope does anybody else have, let alone consumers?” Ms Stylianou said.
She said the IPA believed the next step was to remove some of ASIC’s powers.
“That’s a bold step going forward, but I think that might be what’s necessary if we’re going to have meaningful reform,” she said.
“There have been so many reviews of ASIC and a lot of us have done so many submissions over a long period of time. We think, well, what’s come out of [those reviews], where’s the stocktake of what has happened as a result of all these recommendations and reviews?”
Ms Stylianou said the review should be addressing some of these fundamental concerns and taking away some of ASIC’s powers. With regard to the financial advice sector, it was important that advisers were being treated like professionals who are trusted to make the right decisions.
“The infrastructure and architecture of the financial advice profession is the same as any profession. You’ve got your entry requirements, education standards, exams, code of ethics, disciplinary system, mandatory CPD — all the hallmarks of any profession,” she said.
“The next step, as I see it, is to start stripping away some of the excess regulation that’s black letter law. We certainly support more of a principles-based approach.
“If you treat financial advisers as a true profession, that means they’re trusted to know what they’re doing and if people don’t, then there’s a disciplinary system just like any profession.
“But that would mean that all that prescriptive regulation around disclosure and documentation could start to be stripped away.”
Ms Stylianou said this approach would lead to more accessible and affordable advice for consumers.