Former FSC CEO calls for meaningful advice reform

The Quality of Advice Review (QAR) has been described as a “considered and objective assessment” of the regulatory framework governing advice by the former chief executive officer of the Financial Services Council (FSC), John Brogden.

In an opinion piece published by the FSC, Mr Brogden, who is now a trustee director of Colonial First State’s superannuation funds, encouraged the government to “preserve the uplift in the quality of advice” and to “create regulatory conditions to ensure millions of Australians can access affordable financial advice”.

“This government has a chance to get the balance right,” Mr Brogden said.

“My caution to policymakers is that tinkering at the edges will not achieve the desired outcomes,” he continued.

Reflecting on the Future of Financial Advice (FoFA) reforms — legislated by the ALP when last in government — Mr Brogden said that while they did improve the professionalism of the advice industry in response to a string of failures, they also made advice more expensive, less accessible, and excluded Australians who most needed advice from getting it.

“Ten years after the FoFA reforms, my greatest concerns have been realised,” Mr Brogden said.

“The number of Australians who now receive financial advice has fallen by around half. And as expected, it is the ones who need it most,” he added.

Mr Brogden noted that these issues have further been exasperated by the recent adviser exodus.

“At the same time, the number of advisers has dropped to around 15,000 from over 26,000 just three years ago. While it was right for some of these advisers to leave the industry, this exodus has not been matched by an influx of new advisers joining the profession.

“And the cost of holistic financial advice has also increased steadily to around $4,000.”

The QAR, he opined, gives this government a chance to “get the balance right”.

But, Mr Brogden warned, “meaningful” reform is needed. 

"Minor ‘housekeeping’ to streamline fee disclosure requirements or to iron out peripheral obligations, like the design and distribution obligations, will address some administrative pain points but they will not make a meaningful difference to the cost of advice," he said. 

Mr Brogden also noted that a bipartisan approach in this area is possible, “potentially increasing the likelihood of meaningful reform”. 

He applauded “both major parties” for recognising that the pendulum has swung too far.

“Both major parties want to see more Australians get advice,” Mr Brogden said.

“We encourage the government to look to the future needs and not the past failures in the interests of millions of Australians.”

The final QAR report is now with the Financial Services minister and a response from the government is expected in the coming days.