Liberal senator hits out at excessive financial advice costs
Liberal senator Slade Brockman has said the government needs to have a “cold hard look” at the level of regulation in the financial advice space and the costs of running a business.
Speaking in the Senate on 26 March, Senator Brockman discussed how wealth creation has “become a dirty word” and individuals should be encouraged to thrive and participate, assisted by financial advisers.
He said: “We want Australians to engage with their financial futures, to actively engage with wealth generation, and to be the best they can be as individuals, as families and as small businesses.
“One of the key components of doing that is a strong, vibrant and not over-regulated financial advice sector. It is time we had a cold hard look at the sheer level of regulation and cost we are imposing as a society and as government on this sector, and think about ways we can reduce those costs and reduce that burden so more Australians can actually access high-quality advice to improve their financial futures.”
He said costs involved in running a financial advice business include the fee for the Australian financial services licence, fees for life insurance distribution, professional indemnity insurance, the levy for the new Compensation Scheme of Last Resort (CSLR) and the levy for the Australian Financial Complaints Authority (AFCA).
The CSLR will be introduced on 2 April, and the first levy for the financial advice subsector will be $18.4 million, a figure that has received backlash from the industry who argue they should not be required to fund retrospective complaints primarily related to Dixon Advisory and Superannuation Services (DASS).
“What’s this adding up to before a business can even open its doors? You’re looking at between $100,000 and $200,000 for every financial adviser before they can open their doors and give a small amount of advice to one client – one family that wants some financial advice, one small business that wants some financial advice, or an individual who’s trying to get ahead in our society,” he said.
Earlier this week, the government released the first tranche of Delivering Better Financial Outcomes legislation in Parliament which aims to reduce red tape by introducing changes such as streamlining ongoing fee renewals, clarifying provisions around conflicted remuneration, and clarifying how superannuation funds can charge for advice.
Commenting on the release, Minister for Financial Services, Stephen Jones, said: “There are over 5 million Australians at or approaching retirement who need assistance to navigate the pension and superannuation systems. Unfortunately, the average cost of financial advice puts professional advice out of reach for many Australians.
“The Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice.”
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Laura Dew
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William Mills Price Financial Intelligence