The Advisers Association (TAA) says the Joint Associations Working Group (JAWG) is proof that financial advice associations can work together to advance the profession, and therefore the time for self-regulation is right.
TAA CEO Neil Macdonald says, ‘JAWG includes key associations from across the industry, representing many different types of financial advisers and many with quite different views, yet it is able to arrive at enough commonality to produce, for example, joint submissions to Treasury on the future of the profession. Since forming, some of the member associations have merged, so increasingly, we have a common voice.’
Mr Macdonald says the financial advice landscape has changed significantly in the twenty-plus years since the Financial Services Reform Act (FSRA) drove the change to Licensees and Authorised Representatives, and increased consumer protection.
‘The ASIC business model of regulation that resulted from that was predicated on a small number of large institutionally-owned licensees – eg, the big four banks. That has changed over the past five years, and we now have a few large licensees and many smaller ones,’ he says. ‘The Future of Financial Advice reforms, the Best Interests Duty and the exit of the banks has radically and quickly changed advice firms and advisers. It’s a whole different ball game.’
Mr Macdonald also says both the Quality of Advice Review (QAR) and the Australian Law Reform Commission (ALRC) recognised that regulation and legislation have built up over the years, resulting in an overly-complicated complaint process for advice, without any material benefits to consumers, and significantly increased the cost for advice. It also didn’t meet consumer expectations or immediate requirements.
‘Our industry and our associations have matured, we are now a profession and professions self-regulate,’ he says. ‘The role of associations could include the setting and supervision of not only education standards, but also ethical standards. Associations could very effectively triage and address problem advisers and maintain appropriate professional standards.’
Associations are also well-placed to handle Standard 12 of the Code of Ethics which requires financial advisers to report any unethical behaviour of their peers. ‘In fact, Australian Financial Complaints Authority data shows advisers are harder on other advisers than AFCA staff when reviewing cases,’ he says.