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Financial services needs to be truly professional

by Lewis Panther | 05 Sep 2019
Financial services needs to become a “true profession,” Senator Jane Hume told FINSIA Summit 2019.

The federal government minister revealed she shared the view of Commissioner Kenneth Hayne and that of FINSIA’s whose professionalisation strategy predates the Royal Commission at the event in Melbourne.

The chair of the Senate Economics Committee - who admitted she hired her chief of staff after being a panellist at her last FINSIA event - said financial advice would always be needed.

But she insisted that advisors need to get to grips with FASEA and adhere Royal Commission requirements - as well as admitting customers needed to get to grips with their understanding of their own  financial circumstances.

She said: “It is critical that the industry is held to high standards and that any misconduct is eliminated. 

“We share Commissioner Hayne's objectives of moving the financial advise industry to the standard of a true professional.”

Senator Hume, whose comments about the levels of customer competency resemble the findings of FINSIA’s own survey from earlier this year, added that helping Australians budget better was a pivotal issue.

“We all know that Australian's find it stressful to deal with money” she said. 

“At least one in three Australians find dealing with money overwhelming. 

“So any discussion about power of consumers really has to start with financial capability. 

“When Australians understand the principals of things like budgeting and taxation and benefits of saving, they can plan ahead and then make informed decisions. 

“You don't need to be an expert, but you do need to know what questions to ask and where to look for the answers. So, in other words, knowledge is power.”

While government initiatives were ongoing, she did say “there will always be a market for financial advice”. But she also insisted the sector had to adhere with new FASEA requirements including complying with code of ethics, as she expanded on the decision to extend the deadline for passing approved exams.

She told the audience: “Its important to recognise that, while making these changes to raise education standards, you also need to balance the impact of those reforms against maintaining ongoing availability and affordability of advise. 

“Advisors will now have until the first of January 2026. That’s two additional years to meet the qualifications requirement. 

“The extension of the qualification requirements recognises that many advisors need to balance work, study and family commitments. For instance, many women, like I do, juggle with a period of maternity leave and study at the same time. 

“Maintaining a diverse advisory industry with both a good mix of men and women is fundamentally important.

“The extra time that we've provided to comply with the FASEA requirements should not be a reason to procrastinate. 

“We want advisors to get on with it. To enrol and seek the exams at their earliest opportunity.”

Referring to the “harrowing stories of unethical behaviour inflicted upon unsuspecting ordinary Australians” means there is a sense of urgency around public expectations to the biggest and most “comprehensive corporate and financial services reform process since the 1990s”. 

“Over the next 18 months these reforms will dominate the treasury program,” she said. 

At the end of the day that started with futurist Brett King talking about the need for Australia to let the tech sector help financial services thrive, Senator Hume indicated this would be done - especially when it helps customers.

“I am committed to supporting an Australian Fintech sector in hopes consumers will become more engaged with the financial products and services they use,” she said. 

“That enhances financial literacy and capability and also it helps us all spend less time and less money managing our own fees. 

“Our regulatory settings for Fintech serve a dual function, promoting innovation, but also protecting Australian consumers. The government is committed to reintroducing legislation for comprehensive credit reporting ratings given lenders access to data to make a more accurate assessment of borrowers true credit position.

This is a fledgling sector, but it's growing fast in Australia and we really want to see it take flight.”

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