Recent Reflections on Financial Services at our AGM
It was a pleasure to speak at FINSIA’s AGM and provide an overview of the political and regulatory outlook for the financial services sector.
The Financial Services Council (FSC) represents Australia’s funds management, superannuation, life insurance and financial advice licensee sectors.
It has been more than five years since the first calls for a Royal Commission into Financial Services were made by a major political party.
In this period, the financial services sector has been on the backfoot.
The Financial Services Royal Commission was a low point in terms of the community’s trust in the industry and the industry has had a reactive agenda for nearly half a decade.
It also meant that often the design and implementation of new laws flowing from the Royal Commission have erred on the side of caution with respect to consumer protections – an appropriate approach in the circumstances.
As we have had an initial period of these laws and now that the dust is beginning to settle, it is becoming clear there is a need to improve their operation. In general, the regulatory pendulum has swung too far.
A key example is breach reporting. Every compliance team would agree that amendments should be made to remove unintended consequences, principally around the flood of minor reports for deemed breaches, which are technical in nature but have no impact on consumers.
The technology supporting the breach reporting regime is also not up to scratch, adding more cost and complexity for industry.
As a sector we need to shape a proactive agenda to address the new layers of regulatory complexity that at times are poorly designed, and at others are duplicative.
There is an important role for groups like FINSIA in this process.
The industry as a whole needs to continue to professionalise, so that as we collectively win back consumers’ trust, we continue to retain that trust.
The Royal Commission discussed at some length the importance of culture in an organisation to a strong attitude to compliance.
Groups like FINISA drive that professional culture and help prevent backsliding – the industry is only one new scandal away from undoing several years of good work rebuilding trust.
The industry also needs to work constructively with the new Government and respond to its agenda.
During the election campaign, Labor was very clear about its priorities for financial services. These include:
- Fixing the regulatory framework for financial advice so it is affordable and accessible, and using the Quality of Advice Review to do this;
- Picking up where the Government left off with respect to technological innovation in the payments system and more broadly with respect to digital assets; and
- Implementing its commitments to crack down on financial scams.
Labor will also have to balance this agenda in financial services against an ambitious broader agenda that includes tackling climate change, aged care, and the ballooning cost of the NDIS.
Ultimately, the Government will need to consider whether it wants to spend another three years of parliamentary time focused on financial services.
The industry must take this opportunity to build a proactive agenda and not be afraid to argue our case. This is an area the FSC and FINSIA will surely work well together.
