Govt failed on financial advice reforms: Labor

The Government has failed to effectively deliver professional standards reform in the financial advice sectors and has been too slow to implement findings from the Royal Commission, according to a Labor senator.

Speaking in the Senate about the Better Advice Bill, Labor senator Katy Gallagher said the Government’s handling of the Financial Standards and Ethics Authority (FASEA) failed to produce standards that were in any way timely or done in an adequate fashion.

“Advisers were subjected to changes and complications to the exam process. When it comes to these advisers, and I had the opportunity to speak to a few of them recently, it's astounding how the government has been treating them,” Gallagher said.

“Particularly in the design and implementation of professional standards and how this will potentially impact on experienced advisers who may be forced out of the industry, taking away their many years of knowledge about how best to serve their clients.

“…That's why the member for Whitlam has written to the Treasurer to demand that he review ASIC's [the Australian Securities and Investments Commission’s] industry funding model and to call for a greater recognition of specialisations and experience in the educational and exam standards for the many callings across the financial advice industry.”

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The second reading amendment for the bill was moved by Gallagher but said the Senate noted the Government had:

• Failed to effectively deliver professional standards reform in the financial advice sector;
• Been too slow to implement the findings of the Hayne Royal Commission;
• Established and then shut down the failed FASEA regime;
• Failed to adequately protect consumers; and
• Caused uncertainty and unnecessary costs for thousands of financial advisers across Australia.

Liberal senator, Slade Brockman, said royal commissions were effectively reports to government and to society and were not “tablets handed down from on high in stone”.

“They need to be considered. They need to be considered in the light of the existing regulatory framework. They need to be considered in the light of practicality. They need to be considered in the light of regulatory burden that's already placed on a particular industry in the interim,” he said.

“It's very important that we take our deliberative role in this place and the role of executive government seriously and actually consider what's coming out of royal commissions—the way the recommendations should be implemented to make them work in practice—and recognise the reality of industries as they operate on the ground.”

Brockman noted the vast majority of people working in the financial advice industry did not act in a way that the “many egregious ones did”.

“However, there is a need to simplify the regulatory system, and this bill does that by increasing regulatory alignment. In particular, this bill includes creating a single disciplinary model, moving the standard-setting functions to the government, introducing annual registration requirements and removing duplicate regulation for tax advisers,” Brockman said.