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Financial Planning

Advice requirements confusing, complex: JAWG

The Joint Associations Working Group has told the Quality of Advice Review to reduce compliance burdens and to enable the delivery of affordable, accessible advice to more consumers.

In a statement, the collective of professional associations called for a more consumer focused regulatory approach, reduced costs and a greater appreciation for professional judgement.

"This could be addressed by ensuring advice is less costly to produce and presented in a way that is meaningful and more easily understood by individual consumers, under a principles-based, consumer-focused regulatory framework that encourages professional judgement," the Join Associations Working Group said.

In its submission, the group outlined five key interdependent recommendations to ensure that financial advice is provided in the best interests of consumers. It tabled consumer focus, a recognition of professional, regulatory certainty, open data and innovation, and sustainability as its central agreed upon themes.

The Joint Associations Working Group submitted: "The Quality of Advice Review should support access to affordable and quality professional advice so that consumers interests are protected and advanced."

"Changes to the regulatory environment should recognise the professionalism of financial advisers and enhance the reputation of the profession as a whole.

"Regulatory certainty needs to be introduced and duplication removed to provide for a regulatory environment that provides consumer protection without adding significant cost and complexity to the provision of advice."

The Joint Associations Working Group submission also urged for improving data quality and applying consistent principles across financial services. The group said this would improve the client experience, reduce errors, lessen the time taken to provide advice and suppress costs.

Sustainability pressures were also flagged in the review submission as an area for improvement.

The group said: "The more Australians can build their financial independence, resilience and wellbeing, the less pressure there will be on governments to fund Australians who are in a less than sustainable financial position. The financial advice sector has an important role to play in reducing this pressure."

Additionally, the submission also made recommendations for the removal of the safe harbour steps from the Corporations Act and clarity on what is needed to satisfy the best interests duty.

A profession-wide position on the tax deductibility of initial and ongoing advice fees and a review of the ASIC industry funding model was also prescribed.

Of note, as previously reported on by Financial Standard, ASFA also called for greater detailing of financial institutions supervisory levies.

The body said: "It's incumbent upon regulators to provide genuine transparency and accountability regarding the manner in which they determine their funding requirements and utilise their funding."

Members of the Joint Associations Working Group include the Association of Financial Advisers, Chartered Accountants Australia and New Zealand, CPA Australia, Financial Planning Association of Australia, Financial Services Council, SMSF Association and The Advisers Association among others.

As a group, the Joint Associations Working Group represents more than 90% of advisers on the Financial Advisers Register and most financial services firms.

Read more: Quality of Advice ReviewASFAAssociation of Financial AdvisersChartered Accountants AustraliaCPA AustraliaFinancial Advisers RegisterFinancial Planning Association of AustraliaFinancial Services CouncilJoin Associations Working GroupSMSF AssociationThe Advisers Association