Little seems to be known or understood by the general public about the changes that have occurred in our industry and that continue to change. I think it’s important to talk about these changes and disruptions that have been occurring and how it is affecting our profession both as a whole and also each practice on a day to day basis.
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In late 2017 a royal commission was established into misconduct in the Banking, Superannuation and Financial Services Industry, which has become known throughout the industry as the Hayne Commission after the commissioner, the Honourable Kenneth Madison Hayne AC QC. This commission brought to a head many poor practices and a culture of greed that existed within several well-known Australian Financial institutions and the industry as a whole. None of us in the industry expected anything but negativity to come from the commission, let’s face it even the name of the commission has negative implications of misconduct. Whilst I am in complete agreement that our industry needed a shake up to close certain practices and loopholes that may attract less than client centric recommendations. My question now is when does it become unrealistic for advisers to conduct business and will all of these new requirements and obligations force out some of the best advisers in the industry due to education requirements and uncommercial regulatory obligations.
The recommendations that were handed down from the Hayne Royal Commission have caused drastic changes within the industry. Changes to compliance obligations have begun to be legislated and honestly have near doubled the amount of back office work that is required to maintain a compliant practice. FASEA (Financial Adviser Standards and Ethics Authority) has been established to standardise the education, training and ethical standards of Financial Advisers in Australia. This has brought with it the obligation for all existing advisers to pass an exam on ethics and the associated sections of corporation law by 1 January 2022. I personally have sat this exam, and I passed. Honestly this process was a very big deal. By the time I completed the study and the cost of preparation courses as well as the actual exam fees, it has cost me thousands of dollars, in productivity and actual costs.
Most of my colleagues who have also sat this exam have all agreed that this process has not made us better advisers rather has stretched us to capacity as we diligently try and maintain commercial practices whilst jumping through the hoops of the endless changes to the industry.
In addition to this, many of us have to complete further study to update our education to what is now an equivalent or approved degree. Sadly I think this is going to be detrimental to the industry. Whilst I am more than happy to complete the bridging courses to bring my education up to standard, many advisers particularly those with more than 20 years industry experience have not had to complete university level study since when they began in the industry. Therefore it is becoming more common at the moment to hear that many of the most experienced advisers will not be completing this requirement rather are selling up and heading out of the industry. Losing this life and industry experience will in my opinion have a negative impact on the community as a whole.
The Hayne Commission and its subsequent industry changes has overall been a good thing. The introduction of the FASEA code of Ethics has brought with it professional standards that have long been best practice that now as a community we are bound by. The wind of change that is upon us in the financial services industry I hope will be beneficial long term to Australians as a whole. I hope that it will provide more opportunities for everyone to be able to access good quality advice and benefit all members of the advice process.
To the politicians who are passing the legislation; I hope that you will consider the impact of the decisions you are making as I fear now more than ever the term ‘Rome wasn’t built in a day’ becomes pertinent. By changing our obligations in a very short timeframe is making it hard to run a commercial business and meet our client’s needs and best interests. What other option do we have? The alternative is to not comply… but quite frankly, I’m too pretty to go to jail!
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