Advice reform the ‘most pressing area of deregulation’: FSC

Speaking at an event in Sydney on Thursday night, Financial Services Council (FSC) CEO Blake Briggs said completing the Delivering Better Financial Outcomes (DBFO) reforms is “perhaps the most obvious, but also the most pressing area of deregulation, which promises unleashing a wave of investment”.

“Advice businesses, superannuation funds, life insurers, investment platforms, all stand ready to make significant investments in innovative new human and digital advice solutions,” Briggs said.

In December last year, Financial Services Minister Stephen Jones unveiled further details of the government’s second tranche of the DBFO, including some of the specifics relating to the new class of adviser (NCA).

Briggs said the FSC welcomed the government’s “direction of travel”, however noted that it is yet to be seen how this “translates to legislative drafting”.

Whatever the reforms look like once drafted and eventually legislated, he stressed that “the next parliament should not simply finalise advice reform and then wash its hands of the financial services industry”.

“I would start with the fact that the regulatory pendulum for the superannuation, funds management and financial advice sectors has swung too far over the last decade - under successive governments,” Briggs said.

“The financial services royal commission shone a light on, and addressed, some of the systemic issues in the industry. The royal commission, however, is not the sacred cow that it once was.

“It is appropriate for policymakers to now revisit and scrutinise the design and implementation of some of its recommendations and the impact of that regulation on the industry and its consumers.”

According to the CEO, the effects of the royal commission and “hastily implemented” regulation are dragging down industry and hurting consumers.

“Neither side of the political spectrum has clean hands when it comes to industry regulation,” Briggs said.

“Some of the reforms that had their genesis in the royal commission were hastily implemented, some under the Morrison government and others completed by the Albanese government.

“The industry and its consumers are now enduring the costly overhang of poor regulatory design and implementation.”

In order to combat these issues, he argued that Australia needs to take advantage of the nation’s “globally competitive funds management industry”.

“Our internationally recognised wealth management expertise offers immense opportunities for export growth, which unlike solar panels or quantum computing, does not need expensive government subsidies or directed investments,” he said.

“Just 6.5 per cent of overall funds under management in Australia is globally sourced, compared to 78 per cent in Singapore and 90 per cent in Ireland. The export-led growth in these jurisdictions has been achieved through a political focus on regulatory and tax settings that make them globally attractive.

“Tax settings can be streamlined so that Australian managed vehicles are internationally aligned, including removing barriers for funds transitioning to the new and globally competitive Corporate Collective Investment Vehicles.”

As outlined in the FSC’s Federal Election Policy Priorities, published last week, Briggs said the association’s policy recommendations to foster economic growth would generate an additional $19 billion of GDP over the next decade and an additional $2 billion in funds management exports each year.