Is it time for industry-established standards in advice?

Taking to LinkedIn, researcher and speaker Dr Katherine Hunt has questioned why there are no standards for financial advice that are built by the profession, followed by the profession, talked about to clients, enforced by peer-assessment, and monitored by the regulator.

“And no, it’s not *XYZ’s fault,” Dr Hunt wrote, alluding to the government, ASIC, AFCA, licensees, and personal indemnity insurers.

“It’s not one’s fault,” she noted, adding, “that doesn’t mean it’s strange they don’t exist”.

“Building standards exist. Accounting standards exist. And surely those two professions are at least similarly complicated to financial advice.”

Dr Hunt ultimately opined that “it’s time for the financial planning profession to build their own standards”.

“Australian standards. By the profession, for the profession.”

Speaking to ifa, Dr Hunt explained that one of the cornerstones of a profession is “practitioner-developed standards” on every key process that the profession does.

“The practitioner-developed standards are then provided to the licensing body, the regulator, and every licensed practitioner.

“But the key is that the standards are developed by practitioners. Regulation still has a role — that’s the bare minimum level. But no builder would say, ‘Well, what I did is not technically illegal’. Instead they would say, ‘What I did was to standard — here are the publicly available standards and you can see that is true’.”

Noting that “standards are above the law”, Dr Hunt added that “keeping each other accountable” is key.

The self-regulation of advice has previously been raised by former shadow assistant treasurer and shadow minister for financial services, Stuart Robert, who opined that the profession is now at a point where it is “well and truly” able to stand alongside other professions.

“The profession should be allowed to manage its own educational standards without recourse to government. That would be particularly helpful.”

He also shared in March this year that the opposition would support the new Financial Advice Association Australia, which is the group formed after the merger of the Financial Planning Association and the Association of Financial Advisers, to act as a quasi-regulator and oversee education standards, including to discipline members for poor ethics.

Mr Robert suggested that this approach would bring financial advice regulation in line with the legal profession, where state-based law societies regulate professionals in their jurisdiction.