The Japanese art of kintsugi, which roughly translates to “golden joinery”, involves repairing broken, chipped, or cracked pottery with gold – often powdered gold mixed into an urushi lacquer.
Generally understood to have originated in 16th century Japan, the method is not merely an aesthetic choice – creating something beautiful out of something broken – it is a physical representation of a philosophy that acknowledges and values the history of an object.
The goal is not to have it looking just like new, rather getting it back to a point that it can perform its function while honouring its past and embracing the beauty of imperfection. The beauty of the final product is indeed inextricable from the damage it has sustained.
The Quality of Advice Review (QAR) and the subsequent Delivering Better Financial Outcomes (DBFO) reforms were a chance for the Labor government and Financial Services Minister Stephen Jones to perform a similar act.
What has happened to financial services legislation over the past decade-plus is less analogous to a crack in a matcha bowl and more closely resembles a teapot repeatedly thrown at a brick wall.
Unsurprisingly, this has seen advisers flow out of the profession faster than tea from that broken pot.
Minister Jones has certainly attempted to stem the flow, with the experience pathway acting as a temporary patch that will gradually erode as advisers who meet the criteria end their careers.
The DBFO measures should go further, reducing some of the red tape burden foisted on the profession to stamp out the bad behaviour that was largely the domain of large institutions – institutions that decided to leave advice rather than deal with the consequences of their actions.
As the minister is fond of saying, previous reforms have protected Australians from bad advice, but they also protected them from good advice.
At the same time, however, institutions are being welcomed back via a new class of adviser.
While the announcement drew ire for more than just the poorly-considered “qualified adviser” title, giving critics such an easy target to distract from any of the positive measures is indicative of a trend of failures.
Beyond advice legislation
ifa’s coverage of the government is largely focused on the areas that are most directly relevant to advisers, but the issues are much broader than this.
Labor has been virtually unable to progress any measures within the financial services space without significant blunders. Shockingly, the essentially stalled objective of super legislation has suffered the least pushback.
The same can’t be said for the disastrous Division 296 measures aimed at reducing tax concession for super balances above $3 million.
It’s a change that, while cause for concern among the small proportion of Australians with large retirement nest eggs, should have sailed through with little controversy – after all, many of the early arguments against it were aimed at how unnecessary it was given prior changes to contribution caps that made this something of a legacy issue.
Unfortunately, their reach exceeded their grasp.
All the government needed to do was not tax unrealised gains and index the threshold to avoid such strong industry pushback.
The changes to the tax agent code of conduct have arguably faced an even worse fate, put through as a determination under ministerial direction with minimal consultation. Now the joint accounting bodies are taking out full page ads in major newspapers blasting Minister Jones’ actions.
There have since been concessions, but much like the backtracking on changes to section 99FA of the SIS Act, it is just another example of poorly drafted legislation causing unneeded angst among financial professionals.
Then there’s the Corporations Act, a broken piece of legislation that has become bloated over the course of decades to the point that it is more akin to a cluster of related acts held together with super glue and some duct tape.
The language that judges used to describe the Corporations Act in an Australian Law Reform Commission’s (ALRC) report could be labelled anywhere from colourful to damning. “Porridge”, “tortuous”, “treacherous”, and “labyrinthine” were among the choice phrases conjured up to get across the idea that the legislation is difficult to navigate, costly to comply with, and unnecessarily difficult to enforce.
Yet since the report was tabled in January, and despite Attorney-General Mark Dreyfus saying the government was “carefully considering the report and recommendations”, there hasn’t been a peep.
The same has happened with reforms to the regulatory framework for managed investment schemes.
The government originally announced a review in the October 2022–23 budget, with a consultation paper released in August 2023.
While the Treasury website still lists a report on the MIS review as being due in “early 2024”, the wholesale investor test portion proved contentious and was spun into its own parliamentary joint committee inquiry that has delayed Treasury’s findings.
Light shining through the cracks
There is a glimmer of hope that things could turn around, with FAAA chief executive Sarah Abood announcing last month that the minister has heard advisers’ concerns around the Compensation Scheme of Last Resort (CSLR) and is “genuine in his intent to work with us to ensure that the CSLR achieves the goal that we all support”.
“He has advised us that the FAAA will have the opportunity to work with Treasury to outline unintended consequences of the CSLR and listen to pragmatic and feasible solutions,” Abood said.
On Wednesday afternoon, the FAAA provided an update that it has now met with Treasury and it raised a “number of concerns that we are raising with Treasury to ensure the CSLR‘s funding model is fair and sustainable”.
However, the repeated missteps that have plagued Minister Jones’ tenure so far have seen him, like a reverse alchemist, let a golden opportunity turn to lead.
There’s no way to undo the damage that successive governments and reforms have wrought on the advice profession, but the government could learn from kintsugi and treat the broken pieces of advice legislation as an integral part of the repair process.
Me am look good forward to become Qualified Advisor in Australia. I am selling in overseas now but move to Australia and to become Qualified Adviser to on big salalry. Would you like to by Superannuation Fund to ?
The only way to fix this mess is to strap it all and start over again and please this time use some commonsense. Legislation must make all advice free from product contamination, make it a criminal offence for advisers to have any association with product providers.
“Conflict of Interest” advice is at the core of most product failures for example Dixon’s would never have happened if this limitation was in place.
This could be solved in a day if you got the interested parties in a room and then voted on their best ideas that could be immediately implemented and allow everyone to move forward. Sounds too simple? Bet it would be 100% better than the hot mess we now enjoy…!
Good article, however I don’t agree that the legislation was ‘poorly drafted’. Treasury, ASIC and Jones are not idiots, quite the opposite. They were deliberately attempting to retain or worsen the gordian knot of over-regulation.
As for the term Qualified Adviser, it would be foolish to think this was ‘poorly considered’. This label is a deliberate distraction from the bigger issues of a conflicted, product-driven advice regime. It has been put forward solely so it can be later dropped, giving Jones the appearance of a minister who has listened and consulted. Meanwhile, he won’t budge on the other issues, which are far more important.
Good summary Keith and interesting use of metaphor! I wonder how much of the failure to do the common sense stuff is due to excessive influence of taxpayer funded ideological zealots in Treasury, ASIC, and Choice, who are disconnected from the real world.
The entire industry is a joke.
Received my first “please explain” email from a so-called “innovative” platform provider this week – on an annual fee of less that $2k.
Don’t worry, yours is in the mail. (Be prepared to be asked for the entire client file – by the platform provider)
Did we ever find out the names of the persons responsible for the term “Qualified Adviser” ? Because they really should be behind bars.
What a joke.
Please name and shame the platform.
I thought I gave clues with the “innovative” tag.
They aren’t in reality.
In his “keynote address” at a recent “summit” their head honcho said, – And I quote ,
“The focus now is on business model innovation, technology and the client, not regulation and industry issues.”
Hilarious.
Oh – forgot to say, the above fee is inclusive of GST 🙂
Netwealth.
It is not beyond the bounds of possibility that your observations, certainly correct, have been caused by conflicts of interest for the current government because of their close ties to one section of the financial services industry.
Advice in Australia is more like the Japanese term called: hara-kiri.
Chatgpt that.
It’s piecemeal not kintsugi and a HUGE reason we have the toilet paper legislation and regulation in Australia for Financial Services. It is the single biggest lazy problem, bandaiding is NOT the solution. You have used a false analogy.