The FAAA says Financial Services Minister, Daniel Mulino’s, National Press Club address on August 19 must put Australians’ access to affordable, trustworthy financial advice at the centre of the Government’s reform agenda, including implementing DBFO reforms.
With Australians facing rising living costs, a more complex tax system, and an increasingly difficult financial landscape to navigate, the FAAA’s CEO, Sarah Abood, says the Government must act on four issues that directly affect consumers’ ability to access professional financial advice:
- Enabling consumer choice and lower costs through the implementation of sensible Delivering Better Financial Outcomes reforms
- Making the CSLR sustainable, so the costs don’t continue to drive up the price of advice
- Preventing future harm, particularly from predatory lead generation practices that can steer consumers towards inappropriate financial products
- Supporting the growth of the financial advice profession across all business models, ensuring consumers have choice about how they access advice
The FAAA says the DBFO reforms must deliver the simpler, more efficient advice system that was promised. “Consumers should not be paying for unnecessary paperwork and regulatory complexity,” Abood says.
Advice Costs Rising
She says that too many Australians cannot afford financial advice, noting the median price of financial advice has risen by 65% over five years, and is currently around $4,700.
FAAA research shows nine in 10 advisers expect the CSLR levy to further increase the cost of advice, with the average practice facing a bill running into thousands of dollars per adviser.
“Innocent financial advisers are currently paying these bills, and in many cases are forced to pass the costs on through higher advice fees. Consumers should not have to pay more for professional financial advice because of failures by completely unrelated firms and in other parts of the financial services system,” she says.
“Wrongdoers should be pursued for compensation payments before innocent parties have to foot the bill, and AFCA’s rules and powers should be strengthened so complaints can be made against all parties that contributed to consumer detriment.”
Aggressive Sales Tactics
The FAAA also points to the collapse of the Shield and First Guardian products which it says show how devastating high-pressure sales tactics can be when unregulated lead generators funnel consumers, often via unsolicited calls, into products promising high returns.
“Consumers need stronger protections against predatory lead generation, while still being able to find the right adviser for them.”
Growing the Profession
The association says the number of financial advisers has halved since 2019, while the demand for advice is growing.
“We support the Government’s proposed education reforms and urge Government to bring these forward as soon as possible. Growing supply and ensuring there are a diverse range of advice practices will help lower costs for consumers…”
Abood says the Minister’s address is an opportunity to put consumers back at the heart of financial advice reform and prevent future harm.
