Legislation

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”.

While the government takes its time drafting the second tranche of advice reforms, representatives for the life insurance agency fear the ongoing delays will spill over into the next federal election, which could mean the can gets kicked down the road even further.

For advisers that have already started relying on website disclosure, the unclear legislation “may or may not” be an issue, the Cowell Clarke lawyer explained. Whatever approach advisers are currently taking, they should all be paying attention when the regulator releases its guide next month.

Compliance staff have been in high demand for a few years now, but the rise of industry super funds and the private capital sector has created even more demand for talent, both at the top and bottom end of the experience spectrum.

Rather than striving to tick legal boxes, the commissioner said, compliance teams should build their work practice around the right ethical pillars to engender trust with consumers and investors.