Speaking in a recent podcast, shadow minister for financial services and superannuation Stephen Jones discussed some of the difficulties being faced by the advice sector at the moment amid rising compliance costs and a “tsunami” of reforms and what Labor’s plans are for the sector.
Mr Jones was asked what Labor’s stance is in relation to simplifying the regulatory framework for certain types of strategic advice, such as single-issue superannuation advice.
The major accounting bodies have been lobbying for the government for a number of years to resolve some of the specific barriers under the AFSL regime that prevent the provision of low-cost, single-issue superannuation advice.
Mr Jones stated that while Labor is cautious about making these kinds of changes at this point, it would consider changes such as these as part of broader structural reforms following engagement with the industry.
“From opposition, you want to be very cautious about fundamental changes in some of these areas. You want to be able to consult widely with the sector, ensure that whatever you do doesn’t have unintended consequences,” Mr Jones told Momentum Media’s editor of mortgages Annie Kane.
“I think my record in opposition has been that I’ve started with some views, I’ve said, ‘people, here is my theoretical framework on these things, but if when we get down onto the ground that theoretical framework is just impractical and doesn’t work, then prove that I’m wrong and I’ll reconsider those things’.
“In a whole bunch of areas, I’ve been very frank and upfront and said, ‘this is what I think, what do you reckon, is that going to work?’ I’ve listened and changed my mind on things, and that would be the approach that I would take if in a few months’ time I’m the minister in this area.”
Mr Jones said that any reforms around the regulation to strategic advice would require a consultative and cautious approach.
Labor has identified a number of key issues in the advice sector that it wants to focus on, he said, which include addressing some of the current issues with the education framework for advisers and reviewing the regulations and guidance in the consumer credit area and statements of advice in the risk and life sector.
“There’s a whole bunch of just clean up things that we need to do that we can and should do and then there are some of these more structural reforms that need a deep dive, and I’ve mentioned a couple of them, and [changes around strategic advice] would be one in that bundle,” he said.
Commenting on reforms to adviser education, Mr Jones stated that while Labor completely supports the transition of the advice industry to a professional sector, the Coalition had mishandled the reforms.
“The mishandling of those reforms has been a disaster. It’s visited necessary pain upon the advising sector. We have had a tsunami of regulatory change right across the financial services industry, no less in the financial area,” said Mr Jones.
“It needs to be done properly. If I could just pick one example of the mishandling of it, assuming that everybody who holds a financial service licence is providing one sort of financial advice, whether it’s life advice, risk advice, or whether it’s wealth management advice and trying to ram everyone through a professional qualification that fits that particular view of what the industry looks like is just absurd.”
Mr Jones also said that not enough attention had been given to managing the transition properly to ensure that new people want to enter the profession and that existing advisers who have decades of unblemished advice service are not driven out of it.
“These people have been doing a fantastic job for decades, why are we driving them out of the industry at a time when Australians need access to this advice?” he said.
“We think fixing the advice area is the great unfinished business in the financial services area. It absolutely needs attention.”
To listen to the podcast, click here.
This problem will still be around in 15 years. Great job ASIC