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The industry is in transition, the Assistant Treasurer says, and must focus on the needs of Australians.
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Labor ‘has appetite for bold reform’ on advice rules
18 November 2022
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The financial advice industry is in transition and Labor has an appetite for bold reform, Assistant Treasurer Stephen Jones said yesterday.
He said the previous culture had failed to focus on the advice needs of Australians and the government was determined to tackle the issue.
“We're moving on and we need a profession which is 100 per cent focused on the best interests of the clients,” he told the IPA National Congress in Surfers Paradise via video link from Canberra.
He said up to 10,000 advisers had left the industry and many were operating in line with a business model that was now out of date. But retaining advisers was one crucial component of three-pronged strategy.
“We are in a transition and we want to ensure that all of the advisers who are currently in the game and have the skills and abilities to provide the advice are able to be retained,” he said.
“Our experienced adviser pathway, one that recognises the long and professional service of advisers in enabling them to continue to hang on to their licence, is one of those measures.”
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A second approach involved widening the avenues to entering the profession.
“We’re actively exploring the pathways to entry for the financial advice licence and accreditation,” he said.
“It’s currently a very narrow pathway and there’s work going on inside Treasury to review whether we can expand the qualifications that are eligible to receive that financial advice accreditation.”
The Quality of Advice Review, led by Michele Levy and due to report in December, was another factor, with its interim recommendations suggesting a radical reduction in documentation.
“We're following processes that are done in the name of consumer protection that don't provide any protection but add an enormous cost burden to the advice giving process – we should stop doing it,” Mr Jones said.
He said the problem should be looked at from the perspective of consumers as well as the profession.
“There's another way of looking at it as well and that is by looking at this through the prism of the individuals - what they need and when they need it in their life.
“So we're also looking at that to see what other mechanisms are available to provide advice and information, and whether our regulations and our laws are appropriately crafted to ensure that we’re able to supervise other advice models into the industry, and if not what can we do to ensure we have safe professional information advice available to the Australian people.”
IPA group executive advocacy and policy Vicki Stylianou said the compliance burden of the existing regime was why the cost of financial advice had risen and asked Mr Jones about the government’s resolve to fix the matter.
“Do you think there might be an appetite to go bold on these reforms and pull out some of the things that are adding to the costs through the compliance burden? Do you think there might be an appetite to go bold and fix the problems?”
Mr Jones: “One word answer: yes.”
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