Source: Australian Treasurer
Introduction
I would like to acknowledge the Ngunnawal and Ngambri people as the traditional custodians of the land we are meeting on.
I pay my respects to their Elders past and present, and I acknowledge any First Nations Australians in attendance.
Thank you to Colin and the team at Conexus for the opportunity to contribute to your discussion this week.
Australians need access to quality and affordable financial advice.
Quality financial advice can give Australians peace of mind.
It can help protect them from the risks of scams and dodgy investments.
And it can lift their financial well‑being and set them up for the future.
But – as you well know – quality financial advice is sadly out of reach for too many Australians.
It is why I have spent my time as Minister undertaking the largest reform project to financial advice in over a decade.
Because Australians need it.
And reform was needed.
This space was left in tatters by the previous government.
Under their watch, the number of advisers fell from 28,000 in 2019 to where we are today with fewer than 16,000 advisers.
A shrinking pool of advisers became laden with higher costs that made advice increasingly unaffordable and inaccessible for Australians.
Now I am heartened by comments from the Shadow Minister and Opposition who I believe want to support our reform direction.
And I take that support at face value.
But unfortunately, their actions when in government told a different story.
Within a few months, we will be asked to vote on the direction of the country.
Australians who want better access to advice and information will need to judge the Opposition on their record, not just their rhetoric.
In contrast, the actions of our reforms have been based around 3 objectives.
We need to retain and attract more financial advisers into the industry.
We need to cut unnecessary red tape that is driving up costs without providing a consumer benefit.
And we need to ensure Australians have confidence to seek advice and engage in the financial system.
Retaining financial advisers in the industry
Before coming to government, I made a commitment to address a glaring problem in the sector.
It has been a bipartisan commitment to professionalise the financial advice industry.
The modern financial adviser will have a degree, pass an exam, adhere to a code of ethics, and undertake on‑the‑job training.
This has raised the quality of financial advice that clients expect, giving them confidence and supporting better outcomes.
However, the implementation of the requirement for financial advisers to hold tertiary education qualifications was bungled.
Long‑time advisers, who had diligently acted in their clients’ best interests, were told to go back to university or find a new line of work.
Unsurprisingly, advisers started leaving the industry in droves.
Not every exit was a tragedy.
But plenty of good advisers felt they had no choice but to abandon their work like they had been abandoned by the previous government.
This was a genuine crisis point for the industry’s viability.
I couldn’t stand by and let this continue to unfold.
So we made an election commitment to introduce a new pathway for experienced advisers with a clean record to remain in the industry.
And upon coming to government, we quickly acted to legislate this reform.
Over a quarter of the industry has now used our pathway to continue to provide Australians with the advice and information they need.
4,000 advisers who could have been lost to the industry.
It was a necessary change that was in the public interest.
Bringing new financial advisers into the industry
But this only staunched the bleeding.
FASEA put an albatross around the neck of the industry with an unwieldy and impractical education standard for advisers.
Even the opposition realised the folly of their ways and disbanded FASEA.
But its effect was not addressed.
Most people who end up in the financial advice industry have told me that they did not take a direct path there.
They didn’t know at the age of 18 that they wanted to be an adviser.
But the previous government set up a system that immediately thins the herd of potential new advisers.
Individuals are required to make a significant investment in a highly specialised degree.
That means many young people are locked out if they want to keep their options open by studying degrees that apply across many industries.
There are also very few universities offering a degree in financial planning –
And there will be even fewer if we keep on the current track as the demand is not there.
In some ways, the previous government set up a perfect process so long as you don’t need it to train new advisers.
No other industry has been treated like this and it needs to be addressed.
We’re committed to the professionalisation of the industry.
We’re committed to a high quality of advice for consumers.
And we want to repair and rebuild the sector by expanding the pool of advisers.
So today I am announcing the next step in our reform of the financial advice industry.
The government will reform the education standards for professional financial advisers to expand the supply of high quality, helpful and safe advice.
The new standard will continue to recognise the important role of tertiary education.
Under our proposal, individuals will be able to hold a bachelor’s degree or higher in any discipline.
Prospective advisers will need to meet a minimum study requirement in financial concepts such as finance, economics or accounting.
This means firms will be able to attract graduates with degrees in economics, commerce, and finance, amongst others.
They will also need to complete core prescribed accredited financial advice subjects.
This will cover ethics, legal and regulatory obligations, consumer behaviour, and the financial advice process.
This creates a better pathway for career changers who will be able to enter the industry later in life.
For example, someone with a Commerce degree may only need to do the financial advice components – if they haven’t already done it.
This will be complemented by the remaining standards that advisers need to meet –
Namely, the professional year, the financial adviser exam and ongoing education obligations – which will be unchanged.
In combination, this will give consumers confidence that they are getting value and quality.
The cost and time to meet the requirements under the new standard will be halved for most students studying a commerce, economics or finance degree.
It will be halved for people moving across from other financial services careers.
We will also ensure that the education requirements for the new class of adviser will be aligned.
This will create another logical entry‑point to rebuild the advice industry.
This is all about keeping the pipeline of prospective advisers open as wide as possible for as long as possible.
I recognise that some advisers have followed the current pathway.
And I respect the hard work they have done to enter the profession – which is not going to be taken away from them.
But the status quo is unsustainable and without change, the profession will hit another crisis point down the track.
All while the demand for advice is only going to go up because of the 5 million Australians at or approaching retirement.
Cutting unnecessary red tape
We also need to free up advisers to help their clients with relevant advice that is safe and quality.
As it stands, the law makes it difficult for advisers to satisfy themselves that they have met the best interests of their clients unless they provide comprehensive advice.
Everything flows from that.
Advice is not always targeted at what the client wants.
Statements of advice are too long and unhelpful.
And the cost of advice is too high.
The second tranche of our financial advice reform package will address this.
I will be the first to say that I wish I could give you a draft bill right now.
It is our priority and is being written as we speak.
But it is complex.
And we cannot risk endangering consumers by getting this wrong.
Or being too cautious so as to miss this moment to shift the dial.
We have worked constructively across all sectors of the industry – and will continue to do so.
That has taken time, but it has led to a better package for consumers.
There are some who are still suggesting that all the recommendations of the Quality of Advice Review should have been adopted in full.
That should be challenged.
If we had done that, the legislation would not have been supported by stakeholders or by parliament.
But I reaffirm that we are committed to modernising the best interests duty and reforming statements of advice.
Just as we are committed to introducing a new class of adviser that any financial firm can employ to give safe advice.
And we are committed to ensuring those 5 million Australians are able to access helpful advice, information and nudges through their super fund.
I also announce today that we are going further in cutting red tape.
The government will not proceed with Stage 2 of the registration process for financial advisers established by the Better Advice Act under the previous government.
This stage would have required individual advisers to register with ASIC from 1 July 2026 on an ongoing annual basis.
Financial advisers are already registered by their authorising AFSL under Stage 1.
Not proceeding with Stage 2 will retain this existing requirement but will remove an additional regulatory burden on individual advisers.
This would have simply been an additional cost for no benefit to consumers.
Confidence to seek advice and engage in the financial system
The final piece of the puzzle is to ensure that Australians have confidence to seek advice and engage in the financial system.
I was delighted to see our Scams Prevention Framework legislation pass the House of Representatives last week.
This is another step forward in making Australia the toughest place in the world for scammers to target.
Financial advice and our scams prevention work are 2 sides of the same coin.
We want to ensure that advice is affordable so that Australians go to regulated and safe sources of advice – not dodgy scammers.
Preventing scams is also necessary for Australians to feel confident to invest and engage in the financial system.
So our scams work is vital for our financial advice reform.
Sadly, Australians can get inappropriate financial advice that means they lose everything.
And there is a bipartisan commitment that consumers should have access to some redress when this occurs.
The previous government failed to implement the Compensation Scheme of Last Resort, even though they talked about doing it.
We have implemented it as recommended by the Ramsay Review and Hayne Royal Commission.
We welcomed the bipartisan support for its design – given it is the same scheme introduced into parliament by the last government.
But, I am not convinced that it is in its final form.
I am concerned about the sustainability of the scheme on its current trajectory.
It is not sustainable for financial advisers.
And it is no good for consumers if the scheme falls over.
Some people want the quick fix – and I wish there was one.
Unfortunately, 2 of the biggest cases to hit the CSLR – Dixon and United Global Capital – have very different characteristics that make a quick fix very difficult.
So I have tasked Treasury to review the CSLR immediately.
We need to ensure that it is sustainable.
And we need to ensure that it is meeting the objective that we all support.
It is not about guaranteeing investment returns.
But about ensuring genuine victims have access to some redress.
This is an important part of the financial system for advisers.
Because it gives Australians confidence that there is a back stop in situations of genuine last resort.
It’s in all our interests to ensure that is what it is doing.
Conclusion
So – more financial advisers and less red tape.
And confidence for Australians to seek advice and engage in the financial system.
It’s a big piece of work, but a piece of work that is in the public interest.
I am not the first Assistant Treasurer to say a word on financial advice.
And I won’t be the last.
But I’m confident that I am leaving the sector in a better place, and on a better path.
And I believe that Australians will be better off because of it.
MIL OSI News –