Financial advisers are drowning in red tape and compliance related costs, due to the aggressive and never-ending regulatory reform agenda, the Parliamentary Standing Committee on Economics heard last week.
The committee heard from the AFA, the FPA and dealer group, Synchron, on the issues facing the financial advice sector.
In his opening statement, the AFA’s National President, Michael Nowak, said his association is pursuing a deliberate strategy to ensure “…that this important committee was left with no illusion as to the significant issues facing the advice sector and the impact this is having on the accessibility of financial advice as a result of the continuing regulatory reform agenda”.
The AFA alerted the committee to a number of significant issues, including that:
- Financial advisers are drowning in red tape and compliance related costs, due to the aggressive and never-ending regulatory reform agenda
- Access and affordability to financial advice continues to decline rapidly
- Existing financial advice clients are satisfied with their advisers and are the missing voice that needs to be considered in the context of reform
AFA Vice President, Sam Perera and Acting CEO, Phil Anderson also appeared before the standing committee.
Synchron Director, Don Trapnell, in noting some of the imposts on the financial advice sector, told the committee it appears the small business financial advice sector, “…will be forced to fund 75 percent of the cost of the Compensation Scheme of Last Resort, despite being a minor contributor to the financial loss suffered by consumers.
He noted that of 70,500 AFCA complaints, only 23, or 0.03 percent, were unsettled complaints against advisers.
“There’s only one word for that: disgraceful,” Trapnell said. “In what other universe is this kind of penalty passed onto small business with so little justification?”
Synchron Independent Chair, Michael Harrison and Synchron Financial Adviser, Terry Johnson also appeared.
FPA CEO Dante De Gori and the association’s Head of Policy, Strategy and Innovation Ben Marshan provided the committee with an update on current issues impacting financial advice, including the cost of advice, increasing gender diversity and further scope for innovation in the profession.
Responding to questions regarding the 340 percent increase in the ASIC levy, De Gori reinforced the FPA’s position that the current formula for the levy is not equitable or sustainable and will cost the industry.
“In any industry, if a cost or a fee was to increase by 340 per cent over four years that industry would be unsustainable,” De Gori said, adding that the levy ranked highly in the concerns of financial advisers.
