By the end of this year all of us will have a picture of what the advice sector could look like when Michelle Levy’s Review makes its recommendations to government.
With the professional standards regime and wholesale investor test ruled out of the Terms of Reference, a careful reading of the Issues Paper shows this is a Review about improving the direct experience of advice – for advisers, advice businesses and consumers entangled within the regulatory net.
The Review will look closely at advice in all its forms and advice beyond financial product, the interaction of licensees and advisers, and alternate models of advice provision. It places conflicted remuneration and the consent process for fee arrangements under the microscope to, with a specific assessment of the Life Insurance Framework, digital advice, intra fund advice and licensing exemptions.
Very simply: reform proposals that have consensus across the industry will likely succeed, and those which do not will likely fail. As such, a whole-of-FSC submission development process drawing from the expertise of our advice, superannuation, funds management and life insurance members has commenced to an ensure the integrated development of detailed and informed policy solutions for the Review. We are working with advice associations and other bodies to further the consensus on the objectives and reforms that has been achieved in the past two years and are identifying areas for which we can provide insights and research.
The Review touches on all reforms proposed in our White Paper, particularly those aimed at reducing the cost of providing advice by nearly 40 per cent – abolishing the safe harbour steps, introducing personal advice and general information and the Letter of Advice. But these reforms are less significant for their cost reduction as they are for the new model of advice they will ultimately support – the unleashing of piecemeal, limited advice on basic issues and the likely ending of a regulatory culture that has damaged the confidence of the sector to innovate and grow.
That’s why FSC advocacy is not limited to our White Paper. Reducing the cost of providing advice is the main issue but it isn’t the only issue. Much of our current consumer protection framework is guaranteed through the investment of licensees, for example the training, supervision and professional support of advisers or the remediation of consumers. Articulating the role and future of the licensee under a simpler framework is a key priority for our members. We seek reform that acknowledges advice is a profession in which advisers have greater control while updating regulatory net that has run its course.
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