Is that the sound of the first shredding of red tape in financial services?
Treasurer Josh Frydenberg's announcement last Friday to end onerous credit rules so lenders can increase the flow of loans to consumers and businesses is a sign that the Morrison Government is not wasting this COVID-induced recession to do some bold micro-economic reform.
ANZ chief executive Shayne Elliott echoed the view of all of us in financial services when he said that Australia’s increasingly hardline regime of laws and penalties, with often unclear boundaries, had induced sclerotic ultra-caution. "It’s not clear where the line is but if you cross it, the penalty is extremely high. The only rational response to that is to stay away from the line, so you just stay away from the line, you build a buffer. We have become more and more cautious."
We sure have - just ask the law firms!
This is exactly how our advice licensee members felt when Minister Jane Hume and ASIC exhorted them to stop being cautious about rolling out the simpler, cheaper “scaled” advice, so more Australians can access much-needed financial advice during this crisis. Fresh from the lash of the Royal Commission, FASEA and heightened scrutiny from every regulator in town, and sensitive to the vast and confusing web of regulatory guidance, legislative instruments, codes of ethics, statutes, licensing and rules it should surprise no one that advisers and licensees are being ultra-cautious. Navigating a gargantuan compliance net and battling new layers of costs makes offering innovation and choices for consumers near impossible.
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Without more legal and regulatory clarity, a blithe “don’t worry” from the nation’s lawmakers won’t cut it in an economy that seeks recovery and where consumers seek choice. If it were that easy it would have happened. The FSC’s message to the Treasurer is don’t stop now with financial services red tape shredding. Clear rules, clear boundaries and bolder micro-economic reform that assists consumers through this dreadful recession is urgently required.
Its why Superannuation reform - particularly to the default system to end the scourge of multiple, fee-generating accounts - must surely be next on the list.
OPINION PIECE - by Sally Loane, CEO, FSC.