Ahead of Minister Mulino’s National Press Club address this week, where he is expected to announce a raft of new consumer protection measures in response to the First Guardian and Shield collapse, the SMSF Association has outlined what it considers are the essential elements of a meaningful reform package.
The Association is calling for measures which:
- Target the true causes of consumer harm without unnecessarily restricting consumer choice
- Provide stronger proactive regulatory oversight and surveillance
- Create a genuine compensation scheme of last resort with funding settings that more appropriately apportion the cost of poor advice and product failures
- Improve consumer access to quality and affordable financial advice
- Ensures the sustainability of the financial advice sector, many of whom are small businesses
SMSF Association’s CEO, Peter Burgess, said purposeful legislative reform is only part of the solution.
“It must be coupled with proactive surveillance and stronger oversight, rather than a reliance on investigation and enforcement after the consumer harm has occurred.
“Proactive oversight and surveillance provide a stronger deterrent than the mere possibility of investigation and enforcement after the damage has been done.
Directing regulatory resources towards engagement, oversight and surveillance would also help ensure the levies paid by AFS licensees through the ASIC Industry Funding Model are used effectively, rather than being swallowed by escalating enforcement costs after investors’ money has already been lost”.
Targeted legislative reform together with a stronger focus on how the existing regulatory framework can be more effectively enforced, is what’s needed to reduce incidences of large-scale consumer harm and the spiralling cost of unpaid compensation claims.
“It’s what we are hoping to see when the Minister unveils his reform package later this week”, Mr Burgess said.