Speaking at the SMSF Association Technical Summit, IPA group executive – advocacy and policy Vicki Stylianou said that in order to address the unmet demand for advice for consumers, the regulatory regime for financial advice needs to move to a holistic approach.
“This involves a lot of different stakeholders and a lot of different processes but we homed in on ASIC in our submission. The inspiration for that primarily came out of the Australian Law Reform Commission’s interim report which came out in November,” Ms Stylianou said on a panel discussion.
“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.”
Based on discussions as part of the ALRC review, Ms Stylianou said it was clear that even lawyers and judges are finding the laws in this area inaccessible.
“What hope does anybody else have, let alone consumers,” she stated.
The IPA believes the next step forward is to remove some of those powers that ASIC has, she explained.
“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 therefore be addressing some of these fundamental concerns and taking away some of these powers from ASIC.
She also spoke about the importance of financial advisers being treated professionals and trusting them 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.
The vitriolic and persistent persecution and hunt mentality of ASIC toward advisers really commenced with the fallout from Storm Financial.
From that time on, ASIC were given an open book to hunt & kill.
They were provided an open license and the endless funding to prove an example and to support politically driven agendas.
Storm Financial had very little to do with or representation of the majority of financial advisers work, however, the Govt saw fit to wage an insidious and persistent attack on financial advisers as a public relations exercise.
Whilst Storm Financial worked in cooperation with banks to secure equity loans that were leveraged into the sharemarket and consequently failed due to market downturn, the fallout and revenge then commenced against financial advisers as payback.
It was an utter disgrace and politically driven and to this day has been no different.
The entire Financial services legislation needs to be ripped up and binned. This is the source of all of the problems.
This is needed now…it is essential….no question, no argument, no delay, no excuses.
Hooray !!! why are we surprised it’s come to this
100% correct. All the prescriptive requirements for a statement of advice, what wording must be included, how many reviews are required each year, etc allow near-zero room for flexibility and stifle innovation.
The cost of financial advice would fall sharply if ASIC was stripped of powers in the advice area and stopped its ‘heads on sticks’ approach to advisers.
The fall in adviser numbers and the lack of access to financial advice is directly attributable to heavy-handed regulators like ASIC.
Yep exactly, 20 years of ASIC I hate Advisers regime and ASICs own paternalistic over the top mass BS compliance of Advisers. [i]
“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.”[/i]
At the same time ASIC let big Insto
managers & product failures, the real abusers of consumers off completely untouched.
ASIC Madness.
Great suggestion
Maybe ban ASIC from putting out fact sheets aswell. Or at least the individual(s) involved.
Hear Hear. Well said. ASIC for products, FP professional standards board for advice. No more Chapter 7.
Self regulation would mean no more AFCA, no more ASIC – Bring on the removal of BAD REGULATION! Can’t wait.