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I’m pleased to speak with the Association of Financial Advisers today. My thanks to Phil Kerwin and the team.
This has been a time of great upheaval. We have seen:
• mass exodus from the industry
• the spotlight of the Royal Commission and consequential reforms
• The corporate restructuring of key industry player
The environment was made all the more difficult by the Coalition Government’s monumental mishandling of FASEA and the accreditation process.
More than 4,000 advisers have left the sector since the end of 2018, when FASEA’s standards were finally published – mere days before they were due to come into effect. More will leave in the months ahead.
There has never been a time when Australian households and businesses have had a greater need for stable and certain superannuation policy and professional financial advice. We are in the first recession in 30 years and the deepest downturn since the 1930's.
Over 1.5 million Australians are unemployed. More than 36% of businesses have seen a reduction in income of more than 30% and are reliant on wage subsidies to keep their staff employed.
Regrettably, the Government’s only plan has been to dismantle what is working, and to bungle the implementation of reforms that have been a decade in the making.
We can’t say when we will emerge from the health crisis, but the decisions of Government will determine how we emerge. Whether we return to the past or whether we emerge better, stronger, more resilient.
There was great anticipation that last week’s budget would chart a path forward. We were disappointed. We welcome the fact that the Government has adopted some suggestions put forward by Labor: bringing forward tax cuts for low and middle-income earners and introducing a business investment tax incentive.
But there is an enormous fiscal challenge. A record deficit this year and deficits projected for the next decade. Accumulated debt of over $1 trillion. If you are going to spend this amount of money – there should be a legacy. There isn’t.
Their budget showed no vision for our country, and their approach to financial advice has been similar.
They have had no vision for what the industry could be. And they have no plan for how the advice industry can support Australians.
The net consequence of this is that – at the very time when access to professional, quality advice is most needed – it is becoming harder to get.
Labor has a different view.
We want to see a better advice industry. We want to engage with industry and with regulators on how we can address the current advice gap.
We want to see all Australians able to access high-quality financial advice – about their retirements, about their investment needs, about their insurance.
There is a role for government and the industry in providing financial literacy programs which empower individuals to make informed choices about their savings.
Impartial and affordable retirement income advice should be available to all Australians – including low and middle-income earners with modest retirement savings.
The provision of advice must be decoupled from the sales process which means the prohibition of commissions (however so described) from product manufacturers to advisers.
This is why Labor has supported better professional standards and an improved industry.
But the Liberals have constantly failed to deliver on these reforms.
They built FASEA wrong from the ground-up – under-resourcing it, providing it with the wrong direction, and the wrong leadership.
When you have an organisation that goes through three CEOs in less than two years – you know something is wrong.
And when a regulator issues key standards mere days before they are to come into effect – you know that they are not doing their job right.
These Liberal failures have caused tremendous difficulties, crushing small businesses and ordinary financial advisers beneath confusing and contradictory reforms.
We will continue to engage with AFA to chart a different course. There has never been a greater need for households and businesses to have access to quality, professional affordable financial advice.