Financial advice regulation: well-intentioned red tape costs public choice

Not every part of an industry needs minute attention of the regulator. Recent Commonwealth interest in raising university qualification requirements of financial advisors is questionable both as good regulation and threatens the good work ASIC has done to get the Financial Advisers Register up and running.

The much-anticipated Financial Advisers Register is a true milestone in the financial services sector, and part of the ongoing implementation of the Future of Financial Advice (FOFA) reforms. However the milestone’s impact is in danger of being subsumed by a triad of reports attempting to build a requirement for qualifications without a solid foundation.

Under the Register — being launched today by the Australian Securities and Investments Commission — Australians will be able to easily check online important details about financial advisers: employment history, specialisations, and even any recorded bans or disqualifications. And consumer access to information will be broadened further by the end of May, when the advisers’ qualifications and professional body memberships will also be listed.

This public accessibility of information will be a valuable asset when deciding to hire your next financial advice services. And such innovation is vital to strengthen the — still reasonably fledgling — financial advice industry.

Despite this reform progress, the Financial System Inquiry report still recommends for main financial advisers to have a relevant tertiary degree. The same requirement is advocated in the Parliamentary Joint Committee on Corporations and Financial Services report. And intense debate will be fostered by the Government having just released a consultation paper calling for submissions on ways to lift the professional standards of financial advisers.

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