Speaking at an AIOFP dinner in Sydney on Monday evening, Stephen Jones defended the government’s implementation of the Compensation Scheme of Last Resort (CSLR), blaming the burgeoning cost of advice on the dwindling number of advisers operating in the country.
“We’ve got to find the right doorways to get people through and look at post-degree qualifications and the professional year and sort all of that stuff out,” he said.
Jones added that the anger directed at him regarding the CSLR is “fair enough”, but pointed out that the industry funding model is applied “right across corporate Australia”.
“If there are fewer bodies to pass regulatory costs on to, they’re going up,” he said.
“That’s the fact of the matter. So, if you’re looking at why your regulatory fees have doubled over the last four or five years, it’s because the number of advisers who are paying it has halved.”
The CSLR estimate released in March put an additional cost of $1,186 on each adviser for the first full-year period – starting from 1 July 2024 with payment expected in September 2024.
Combined with the ASIC levy of $2,818 per adviser, combined levies will leave advisers out of pocket just over $4,000.
The minister explained, however, that this is just one of the many “bonfires” he is attempting to put out in the sector.
“It’s getting more advisers into the industry, it’s finding a way to spread the costs more fairly across the industry … finding ways that we can fairly deal with those regulatory costs,” Jones said.
“The only sustainable way is to get more advisers and spread the costs right across the industry more fairly. We’re working on that but we’ve got to get the initial bunch of reforms that are either before the Parliament or will be before Parliament sorted out so we can move on to those things.”
Cleaning up the ‘hot mess’
The minister also argued that there aren’t any easy fixes to the “hot mess”, and that the government has been attempting to “work on the crises and sort the crises so that we can then deal with the problems”.
“Anybody who comes to you peddling simple solutions, be very, very, very suspicious of them,” Jones said.
“If there’s anything I’ve learned over the last five years of dealing with this area, if there was a simple solution it would have been put in place, and short-term band-aids are not sustainable. We’ve got to get sustainable solutions to these issues and I’m committed to doing that and I’ve got the support of my government to see these things through.
“We’ve got a bunch of reforms, two waves of reforms to advice and yeah, it’s about you, but mostly, it’s about the people you serve and the people you want to serve and the people who will never come and see a financial adviser but need reliable information and having a safe door for them to walk through. That’s what it’s all about. Hopefully we can get more pathways to the profession through doing that.”
Reiterating the government’s commitment, Jones said he has the support of his “cabinet colleagues and caucus”.
“I have their support because I have won them on the idea that even if you don’t support the [deregulation] stuff, which I do, this is a fight between scammers on the one hand who are ripping the best part $1.5 billion a year off people because they can’t get decent advice,” he said.
“And people who are qualified or competent to give information or advice to support them, whether it’s you, your staff, other licensees, or people that are appropriately trained to give more basic advice through a fund structure. People have bought that and understand the importance of it, we’ve just got to get on and do it.”
Jones also implored financial advisers to support the government’s advice reforms and “judge us by the announcements we’ve made and the work we’re trying to get through Parliament”.
“If you believe in it, get behind us, focus on the main game,” he said.
“There is going to be lots of dust thrown up over the course of the next year, but focus on the main game because we need people to support us in that project.”
