Legislation

Last week’s conveniently ‘leaked’ government proposal on its plans to revolutionise retirement income for all Australians has brought retirement back into the headlines. The detail aside, the proposal couldn’t have come soon enough.

In September last year, the Australian government fixed a glaring anomaly in the country’s laws, under which Australia had embarrassingly fallen short of global standards in fighting financial crime.

While the second tranche of DBFO reforms remain stuck in parliamentary mud, an inquiry into the CSLR design and Dixons Advisory scandal is already falling behind.

As a result of reform failures, the industry and its consumers are now enduring the “costly overhang” of poor regulatory design and regulation, the council boss said.

While the council’s plan for broad tax reform will grab headlines, its three recommendations for the advice industry have the potential to radically uplift the overall health of the financial services sector.

AFCA stands by the use of its “But for” methodology to calculate compensation payments, despite the FAAA’s protestations. Clients will get paid what they lost, plus what they would have earned if the advice wasn’t inadequate. Just don’t call it payment for theoretical loss, or opportunity cost.

Most of what Jones announced was already known, including a new class of advice. But a few key elements – related to adviser education, product limitations and scoped advice – should provide extra relief to an industry in dire need of reform.  

“I wish I could say this is an isolated example,” Kirkland said, explaining the regulator’s concern about a small cohort of advisers who transfer client funds into high-risk investments after being referred by cold-calling telemarketers.

The likely advent of a new class of ‘simple’ advice providers will reshape the industry ecosystem. According to FAAA members, there are four key issues that need addressing before this key reform is implemented.

Advice groups may still be grappling with the best use cases for artificial intelligence tools, but the ones that aren’t at least trying are at risk of being seen as behind the curve according to Complii’s Craig Mason.

The legislative threads surrounding financial services “look less like an elegant tapestry and more like a painting by Jackson Pollock”, the ASIC chair said, before announcing a new thinktank to reassess ways the regulator can help make the system more efficient and less complex.

Despite its potential and the massive investment behind it, the Consumer Data Right has had little impact due to a host of factors. Frustrated with its low take-up, the government is making changes to put the framework on “more sustainable footing”.