Speaking at a recent AIA event, Minister for Superannuation, Financial Services and the Digital Economy Jane Hume made a curious acknowledgement: that the amount of time, money and pressure the Government has put on new entrants into the advice industry was "simply too much".
She said there was a clear need for a more "sensible approach" regarding the current professional pathways towards becoming a financial adviser, and that the Government is considering "[increasing] the size of the pool that businesses can select new advisers from."
"For experienced financial advisers," she added, "we [also] want to recognise the value of that experience."
Hume's comments were part of a broader discussion about the state of financial advice in Australia and the role the current regulatory framework has played in it. As she has done previously, she compared advice regulation to a "Gordian knot," assuring attendees that "[we're now] stepping back and untangling that knot."
You might be wondering what "untangling that knot" actually looks like. To Hume, it involves a "rebalancing" of the "regulation industry" such that advisers' professional standards are "practical as well as professional."
Examples of this included more principles-based and less prescriptive SOAs – "[they] should be more helpful for consumers and less expensive for advisers to prepare" – and streamlined education requirements which "achieve the intent of the FASEA reforms [without] micro-managing advisers."
The Government has already provided evidence of how it will streamline education standards post-FASEA; earlier this year, the professional pathway was opened for consultation. This will enable individuals with 10 or more years' experience over the past 12 years to continue providing financial advice without undertaking a bachelor's degree, provided they have a clean record prior to 1 January 2026.
Predicting what a more principles-based approach to advice regulation would look like, at least as envisioned by the current Government, is somewhat more difficult – not least because many of the more prescriptive requirements Hume gestured towards in her speech were introduced under the current leadership. However, her comments regarding streamlining SOAs and making them more useful to the consumer are certainly in line with what advisers Deborah Kent and Anne Graham told NMP last week.
In that piece, Kent recalled the simpler SOAs of the past, noting that "[we used to] put it in a nice bound cover and [clients] valued it. They’d walk away with something special and they’d add their own notes in as we made updates over time. Now it’s such a big process and people really need to be talked through it."
Graham added that the contents of the SOA – and how much of it could be presented in other media such as videos or PowerPoint presentations – "could be informed by a principles-based approach, and this would enable the adviser to tailor their information to suit the client's understanding."
If their comments are any indication, the Government moving towards a more flexible SOA framework would deliver clear benefits to both advisers and consumers – even if, as we've been told previously, the gargantuan size of the SOA is a symptom of a much bigger problem. The question is: how willing and motivated is the current Government (or Labor, for that matter, which has made similar proposals) to actually make these changes and deliver a more sustainable advice framework?
Obviously, any promises made ahead of an election should be taken with a grain of salt at the best of times. But we're only a few years out from a period where new restrictions and heavier enforcement activity were broadly considered necessary to "restore trust" in a post-Royal Commission advice industry.
It's worth considering, then, to what extent the "principles" of a more principles-based approach to advice regulation would be subject to the shifting tides of popular opinion. If the Government does intend to change its approach, the insights of those actually providing (and receiving) financial advice should be the foundation.
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