The FSC has issued Affordable and Accessible advice: FSC Green Paper on financial advice “to lead the public policy debate on a restructure of financial advice” and it particularly wants to hear from advisers.
FSC CEO Sally Loane says in a statement that the financial advice industry is facing significant challenges, with rising regulatory requirements and cost pressures undermining the economics of the sector.
“The burden of compliance is doing nothing to help consumers, it’s actually putting advice beyond the means of average Australians and driving advisers out of the sector.”
She says the council’s aim with these proposals is to lower the cost of providing financial advice to make it simpler for consumers to understand and access “…all without undermining the quality of advice or eroding important consumer protections.”
The council states that it supports the Best Interests Duty remaining the bedrock of the advice sector and for advisers to be held to a high standard of education and subject to a Code of Ethics.
“There are significant opportunities, however, to reduce the cost and complexity of providing financial advice,” it says.
… the proposals are bold and canvass fundamental changes to the legislative and regulatory framework..
The FSC says the proposals in its Green Paper, which has been developed with the FSC’s advice licensee members, are bold and canvass fundamental changes to the legislative and regulatory framework, including:
- Abolishing the ‘safe harbour’ steps used to comply with the Best Interests Duty, which are administratively complex
- Removing jargonistic advice categories that confuse consumers by simply breaking all advice into either general information or personal advice, and regulating them consistently
- Abolishing costly and unwieldy Statements of Advice, and replacing them with Letters of Advice, which would be short, concise and consumer orientated
The council says its Green Paper is underpinned by independent research from RiceWarner and consumer testing, by research agency Pollinate. The research shows that almost two in three Australians support simplifying financial advice and reducing its cost, provided consumers are adequately protected by law.
The FSC is seeking industry and public feedback for its proposals in advance of finalising a policy position on a more accessible and affordable financial advice system which it will publish in a White Paper later this year.
Loane adds that the council is keen to hear from a wide range of stakeholders, particularly advisers.
Consultation on the Green Paper is open until 1 July 2021 and submissions can be sent to financialadvice@fsc.org.au. Click here for a full copy of the Affordable and Accessible advice: FSC Green Paper on financial advice.
Thankfully, the FSC now realises that the “financial advice industry is facing significant challenges, with rising regulatory requirements and cost pressures undermining the economics of the sector.” Wanting to hear from advisers is also a positive step forward. My concern however, is whether other regulators will be made aware of these proposals (and potential changes), and implement them where necessary. During the FPA’s virtual congress mid 2020, it was highlighted that there are a number of regulators who do not communicate with each other. Therefore, and at the risk of sounding cynical, it will be interesting to see how this ultimately plays out.
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