The Government is releasing a consultation paper and calling for submissions on ways to lift the professional standards of financial advisers.
Financial advisers play a very important role in Australia, helping consumers to plan for their retirement, and to manage the financial risks and opportunities of life.
Two important inquiries – the Financial System Inquiry and an inquiry by the Parliamentary Joint Committee on Corporations and Financial Services (PJC) – have recommended reform in this area.
These inquiries make clear that the current regulatory arrangements are no longer sufficient to ensure high-quality consumer outcomes and to maintain public confidence in the industry.
It is now time to put in place an enduring framework that raises the professional, ethical and education standards of advisers.
The consultation paper is based on the recommendations of the PJC. The PJC recommended a co-regulatory model, in which Government, professional associations, industry and academia work in partnership. The core elements of the PJC model, which is applicable to personal advice on Tier 1 financial products, including shares, superannuation, life insurance and managed investment schemes, are set out in the diagram overleaf.
With the right model, improvements in the qualifications, competence and ethics of the financial advice industry will be a win-win. Industry will benefit from improved consumer confidence and from becoming a recognised profession. Consumers will benefit from increased transparency, accountability and adviser competence.
I encourage all stakeholders to participate in this consultation process.
The closing date for submissions is 7 May 2015.
Further consultation will then be undertaken, until June 2015, to finalise the details of any agreed model. Further information relating to the consultation process is available on the Treasury website.
(Attachment: Core elements of the PJC model)