Consumer protections outweighing advisers’ calls for relief

Financial services lawyer Emma Johnson told ifa the government is unlikely to make any significant reductions in regulations any time soon as it continues to prioritise consumer protections.

“The government has to balance their risk to consumers with the ability for individuals to get more advice, so it is a bit of a balancing act, and I do think that protection of consumers is likely to always win out in that regard, particularly, as the historical issues are not actually all that far in the past,” Johnson said.

She also noted that some of the “rogue advisers” that led the government to implement more stringent regulations on the profession are likely still actively working as advisers, making the government warier when it comes to loosening the reins.

However, Johnson also questioned the effectiveness of the regulations in stopping those who would do harm.

“The controls that are in place at the moment, I don’t know if they are necessarily helpful in that regard, because if you’re going to do harm to people, you’ll find a way to do it anyway. If your intentions are not good, no matter how many laws are in place, you’ll go and break them anyway,” she said.

While advisers have undergone considerable changes over recent years in order to increase their professionalism and remove many who had misbehaved in the past, Johnson believes they will continue to wait for any significant reductions in regulations.

“I see both perspectives. Advisers have increased additional qualification and experience requirements to meet, with that comes increased professionalism in the industry, and I think we will certainly see that take effect,” she said.

“I mean, it already is, but we’ll see the knock-on effect of those advisers being more professional, I suppose, and the provision of their advice, which will make the industry more trustworthy and reliable.

“So that will automatically help the industry, I suppose, in that way, and with that will come trust of others as well, government, whatever, and they may well relinquish some of the controls they’ve got over the industry in time.”

Furthermore, Johnson noted the significant amount of time it takes for the government to make changes and come into play as another factor dragging out the process.

“The problem with easing these burdens is the amount of time it takes. So as you can see with the tranche two, we haven’t had that released yet, even though it was promised some time ago. So it just takes forever to create change in the industry,” she said.

“I think it will take a while for more to happen.”

She suggested that, while the profession waits for a reprieve, they should just “keep the client front and centre”, and ensure they are providing good, holistic advice, “then the compliance gets not as painful from there”.

While the Delivering Better Financial Outcomes (DBFO) bill is set to reduce some of the onerous obligations for advisers, particularly tranche two, which is expected to see the removal of the safe harbour steps and a significant reduction in the SOA requirements, among other things, Johnson believes this will not provide the amount of relief advisers are calling for.

Johnson added: “Yes, the government could do more. When or how they could do that is more the question.”