FSC continues push for self-regulation of advisers

The Financial Services Council (FSC) has outlined its policy and advocacy agenda for licensees as they grapple with a changing landscape.

In a new video update, featuring Zach Castles, FSC’s policy director for advice and platforms, the council has outlined its agenda aimed at helping unburden advice licensees.

“There are over 6,000 advice practices in Australia, the advice businesses authorising some 15,000 financial advisers, otherwise referred to as advice licensees,” said Mr Castles.

“Licensees are absorbing increasing levels of regulatory costs that the FSC is advocating be reduced,” he noted.

Included in its “licensee regulatory reform agenda”, Mr Castles said are policies that support a self-regulating and independent profession maintained by industry standards.

Speaking to ifa, Mr Castles explained that the FSC supports a regulatory framework that “recognises and respects” that financial advisers are professionals.

“A move to greater levels of self-regulation over time also envisages advice businesses having adequate levels of capital and professional indemnity insurance,” he explained.

“Over time, the FSC supports the government identifying areas where self-regulation and industry standards can serve the objectives of improving financial advice for consumers”.

Other key inclusions in the FSC’s agenda are a reduction in costs such as the ASIC levy, the removal of “hurdles” advice businesses face in leveraging technology, greater access to professional indemnity insurance, and the removal of certain prescription in the law such as the safe harbour requirements.

This is not the first time the FSC has pushed for self-regulation.

Back in 2017, the then chief executive officer Sally Loane voiced concerns that a royal commission into the financial services sector would avert progress made towards self-regulation.

At the time, she advocated that the financial services industry is “uniquely placed to take up the mantle of consumer reform”.

“Proving as an industry we can regulate ourselves also strengthens consumer trust in the sector. In this light, we are concerned about a proposal that could act as a handbrake on self-regulation,” Ms Loane said.

“Any continuing reforms and changes in financial services are always needed quickly to keep up with the fast rate of change in the industry, not least because of technology and the rapidly changing needs and expectations of the community,” Ms Loane said.

“Royal commissions are a slow process, only look at past practice and inevitably go off at tangents.”

Earlier this year, researcher and speaker Dr Katherine Hunt 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 on her LinkedIn page, 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.”