In his statement to the Royal Commission, ASIC deputy chair Peter Kell argued financial advice is not yet a profession.
Kell told Special Counsel Assisting Rowena Orr that while there are professionals in the industry, "we do not view the industry as a whole as having reached what would normally be regarded as the standards of a profession at this point in time."
He said it's one of ASIC's objectives that "we move to a profession," and that "it's one of the reasons why the government has recently introduced reforms aimed at raising professional standards for the industry."
In order to advance this agenda, Kell said multiple issues need to be addressed: standards regarding competency and qualifications, remuneration arrangements, conflicts of interest and a broad record of poor consumer outcomes.
"These indicate that we're not yet at a position where we have a profession," Kell said.
"I would also note that we don't have in this sector a single, if you like, dominant professional association. There are some associations which have taken a more forward looking approach to standards, but we certainly don't have a professional association of the sort that you get in other sectors such as medicine," he added.
Kell referred to financial advice as a "relatively new industry" that emerged in the 1980s. He noted that a key part of the industry, especially in its early years, was life insurance agents under a "very much sales-driven model, with commission-based remuneration."
"As the industry grew, in part to serve a growing demand for financial advice as we saw superannuation balances grow, you had the entry of some of the larger financial institutions into the sector, in the late 1990s and early 2000s, several of the major banks made major acquisitions of wealth management or life insurance firms, and established major financial advice businesses in part as a result," he said.
He noted this "sales-driven model" has been changing, but it's still the case that large banks are major participants in the sector - and that in all instances, "the systems that underpinned the ability to collect revenue were better developed than the systems that ensured that the client received the advice."
Kell said this wasn't just limited to the big four banks and AMP - he also cited Yellow Brick Road, First State Super and Bendigo and Adelaide Bank as examples.