Introduction
The financial advice sector saw significant developments this week. Assistant Treasurer Stephen Jones announced major reforms to adviser education pathways and ongoing debates around the Compensation Scheme of Last Resort (CSLR). These developments occur against a backdrop of Treasury consultations on genetic testing in life insurance and continued discussions about advice accessibility.
Industry Updates
Regulatory Developments
Assistant Treasurer Stephen Jones has unveiled reforms to financial adviser education pathways to increase accessibility while maintaining professional standards. The changes include new pathways for experienced professionals and recognition of prior learning. Shadow Financial Services Minister Stuart Robert supported expanding education pathways, signallinga rare bipartisan agreement on advice reform.
ASIC has taken strong enforcement action, permanently banning former financial adviser Lachlan John King following a $1.8 million fraud conviction. The regulator's Financial Services and Credit Panel has also issued a registration prohibition order against another adviser, reinforcing its focus on industry integrity.
Treasury has launched a consultation on banning genetic test discrimination in life insurance, addressing long-standing industry concerns about access and fairness in underwriting practices.
Economic Updates
In remarks to the Business Council of Australia, Treasurer Jim Chalmers emphasised the government's focus on managing economic pressures while maintaining growth. The superannuation sector has shown unity in addressing post-retirement challenges, with industry groups collaborating on contribution framework proposals.
Legislative & Political Updates
The Senate has extended the reporting deadline for the Dixon Advisory inquiry by four months, prompting criticism from industry bodies about delayed reform implementation. The CSLR continues to generate debate, with Treasury facing criticism over funding model concerns. Jones has indicated the "but for" test may be excluded from the scheme's final design.
Industry Responses
The Financial Advice Association Australia (FAAA) has proposed new roles in relation to AFCA and the CSLR, seeking greater industry representation in these key bodies. Industry submissions have also supported government funding for professional year candidates, suggesting $10,000 grants to improve adviser recruitment.
Analysis & Action Items
For Financial Advisers:
- Review education pathway options under new reforms
- Prepare submissions for genetic testing consultation (due March 15)
- Monitor CSLR developments and potential levy implications
For Licensees:
- Assess professional year funding opportunities
- Review compliance frameworks in light of recent ASIC enforcement actions
- Consider the implications of expanded education pathways for recruitment
For Product Providers:
- Evaluate the impact of the genetic testing ban on life insurance products
- Review product governance frameworks against recent regulatory actions
- Monitor post-retirement contribution proposals
Looking Ahead
Key developments to watch include:
- Treasury's final position on genetic testing in life insurance
- Further details on education pathway reforms
- CSLR implementation timeline and funding model revisions
- Dixon Advisory inquiry findings (now due mid-2025)
- Additional tranches of advice reform legislation
The sector continues to navigate significant regulatory change while working to improve advice accessibility and maintain professional standards. The bipartisan support for education reforms suggests the potential for continued progress on reducing barriers to entry while upholding quality standards.
