Financial planning costly and complicated, say review submissions

A review of the financial advice sector seeking to cut red tape and provide affordable advice could lead to more regulations and further reviews, some analysts are predicting.

Industry commentator moneymanagement.com.au reports that the current Australian Securities and Investments Commission (ASIC) affordable advice review may just be the precursor to “a broader, independent review of the legislative and regulatory environment covering financial planning”. Part of the reason for that view was because ASIC is “arguably a stakeholder in the process rather than an objective, independent party”.

Association of Financial Advisers (AFA) general manager, policy and professionalism, Phil Anderson, says the ASIC review “could only achieve so much”.

“Taking the lead and trying to fix many of the issues raised in terms of legislation and regulation will require much, much more,” he said.

The AFA says advisers are hamstrung by current rules, which make it “almost as expensive to deliver limited advice as it is to deliver holistic advice”.

The Self-Managed Super Fund Association (SMSF) agrees that financial advice services are too costly and complicated. Chief executive John Maroney said: “After nationwide consultation with our members, the association has found that the advice process is lengthy, costly and prioritises compliance and the needs of AFSLs (Australian financial services licensees) over consumers.”

The Stockbrokers and Financial Advisers Association (SAFAA) wants more flexibility in the provision of financial advice.

“Consumers want different advice for different needs and the regulatory environment needs to accommodate consumer preferences and requirements and not seek to shoehorn all consumers into one advice service,” said SAFAA chief executive Judith Fox.

“The current complex and volatile market conditions highlight the importance of accessible and affordable financial advice.”

SAFAA says ASIC’s inconsistent approach to advice is a barrier to consumers receiving limited advice.

“While SAFAA does not consider that changes need to be made to the law concerning limited or scaled advice, it is of the view that ASIC should reconsider its conflicting views on limited advice and ensure its reports to licensees are consistent with the provision of limited advice.”

The assistant minister for superannuation, financial services and financial technology, Jane Hume, says financial advice has a critical role to play in Australia’s economic recovery from the recession.

“I am constantly looking for opportunities for red tape reduction, identifying obstacles to productivity and profitability, and reducing the burdens on your industry and its participants,” Senator Hume said.

“I’m not afraid to say that the government has a vested interest in ensuring that you can provide financial advice to as many Australians as possible without being tied up in red tape.

“The government is focused on supporting the advice industry with fit-for-purpose regulation, while maintaining consumer protections. We know that some interpretations of current regulatory settings are creating barriers to consumers seeking good-quality, affordable personal advice,” Senator Hume said.

“The government supports a well-regulated and vibrant financial advice sector that supports advisers seeking to help Australians make informed decisions about their personal finances and to make better use of their savings in retirement.”

Are you happy with the financial advice you have received? What would make financial advice easier for consumers?

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Written by Will Brodie

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