FPA asks next Parliament to prioritise adviser pain spots

The Financial Planning Association of Australia (FPA) has announced its platform ahead of the next federal election, outlining several issues that it believes must be addressed by the 47^th Australian Parliament to ensure certainty for the financial planning profession.

Key outstanding issues, according to the FPA, include ASIC’s industry funding model and education standards, the creation of a Compensation Scheme of Last Resort (CSLR) and further regulation of ‘finfluencers’, as well as the introduction of tax deductions for the provision of financial advice.

“We look forward to working with parties and stakeholders on policies and initiatives that contribute to affordable financial advice for all Australians and a sustainable financial planning profession for the future,” says FPA chief executive Sarah Abood.

The creation of a CSLR is “high priority”, the chief executive said. The professional body wants its design and implementation to meet the full range of matters considered by AFCA, including managed investment schemes. 

The FPA has also advocated for the close monitoring of administration costs of a CSLR to ensure that cost recovery from industry doesn’t end up redirected to bureaucracy and administration.

The Senate economics legislation committee recommended the passage of the CSLR in February, however, with the government now in caretaker mode, it will need to wait until after May’s federal election.

The advice industry is fairly united on the cruciality of a CSLR, with the Advisers Association’s (TAA) chief executive doubling down on his concerns with the regulation earlier this month.

“The stalled legislation should give whatever party comes to power after the federal election pause for thought,” Neil Macdonald said at the time. 

Reforms to education leave industry in limbo

Education has been a particularly sore point for advisers of late, with Ms Abood noting that the profession has essentially been left in limbo when it comes to assessing the education requirements they must meet.

“After a flurry of proposals and announcements over the Christmas-New Year break, financial planners who had not yet completed their education under the current requirements have been left uncertain as to what to do,” Ms Abood stressed.

“We’re calling for both major parties to consult with the profession and clarify the detail as to how any changes to current education requirements would be finalised and implemented.”

The FPA has also strongly advocated for the consideration of experience as a very important factor in the competence and skill of a financial adviser to provide professional services to their clients.

Improving advice affordability and accessibility

The FPA sees great merit in “sensible measures” to improve the affordability and accessibility of financial advice.

To this end, the body has proposed a reduction in regulatory complexity and duplication, as well as tax deductions for Australians accessing financial advice regardless of the stage in the advice process.

Also on the consumer front, the FPA has taken aim at the apparent “two-tier” approach to advice regulation and has requesting regulators take more action on ‘finfluencers’ to safeguard Australians.

“Whilst financial planners are subject to a high degree of oversight and regulation, and consumers can have confidence in the advice they receive from a professionally qualified and registered financial planner, none of these protections apply where ‘finfluencers’ are concerned,” the FPA’s election platform reads.

Conceding that ‘finfluencers’ can play a role in improving financial literacy and confidence among consumers, the FPA argued that that “they are not legally able to give personal or general advice on financial products, and anyone acting on a recommendation from this source is essentially on their own if things go wrong”.

Funding revamp required

Moving on to ASIC and Treasury’s review of the regulator’s industry funding model, the FPA has urged the next government to report their findings before the freeze on ASIC levies charged for personal advice to retail clients expires.

ASIC levies charged for personal advice to retail clients were previously frozen at their 2018-19 level of $1,142 per advice for two years.

Having earlier welcomed the freeze, the FPA has now argued that the Treasury needs to deliver its verdict before the freeze runs out, especially given the contribution “ever changing regulatory regimes and escalating regulatory costs” have on the cost of financial advice.

Overall, Ms Abood said that the FPA’s election platform is confined to matters on which it believes require executive and legislative action during the next Parliament.

“We acknowledge and support the ongoing review of financial services laws and regulation by the Australian Law Reform Commission, and are engaging constructively in this process,” Ms Abood said.

“Likewise, we welcome the commencement of the Quality of Advice Review led by Ms Michelle Levy and supported by the Treasury.

“A number of matters of great importance to our profession will be addressed through these important evaluations and we welcome the current bipartisan approach and support for their delivery,” she added.