The financial planning sector is one of the riskiest regulated by the Australian Securities and Investments Commission (ASIC), according to its Chairman, who said the industry needs to undergo further cultural change.
ASIC Chair Greg Medcraft made the comments at the public hearings of the Senate Inquiry into the workings of the regulator in response to a question from Senator Sam Dastyari.
Dastyari was seeking comment from Medcraft about the proposed amendments to the Future of Financial Advice (FOFA) changes, with ASIC Deputy Chair Peter Kell stating it was a government policy matter.
When pushed further by Dastyari about ASIC’s support for FOFA prior to the Ripoll Report, Medcraft stated that while FOFA was government policy “the advice sector is one of riskiest we regulate” and that ASIC “could not regulate for a change of culture”.
Medcraft stated that while a large part of the advisory sector did a good job, it still needed to win the trust of the public.
“Regulation exists but what really has to happen is that sector culturally has to change and win that trust. FOFA has made good progress but…we appeal to the industry to work really hard to win the trust of Australians.”
“We need a financial advice sector we can all trust, and I would like to see an adviser that I do not have concerns about. All that we have seen in last two years certainly does not contribute to that environment of trust and confidence,” Medcraft said.
Dastyari questioned whether the proposed FOFA amendments would undermine any ongoing culture change and confidence in the financial planning advice arena, to which Medcraft responded that there should be more advice provided.
He said that at present one in five people received advice – and it should be one in two people. The advice sector should not be splitting up the 20 per cent but aiming for 50 per cent of people to receive advice.
“To the financial advice sector, we appeal to them, we need super we can trust.”
