Ever get fed up with all the bad news emanating from regulations in the advice sector? Maybe the private sector should stand up and just reject all the idealism that’s killing affordable advice and making millions for the legal fraternity. It might make more sense to get direction from within the industry rather than fostering outcomes that are impractical.

The latest example is the development of the FASEA education standards. The real question is who is going to monitor and enforce the new standards once they are created, given the impractical cost of implementation by the licensing regime.

As all the academics posture with the agenda and the usual hierarchy prevails, we have the ultimate wakeup call that no one is capable of enforcing the requirements if the advice industry moves to a profession and adopts a self-regulatory framework.

That is to say, neither the FPA nor any other association is capable of taking on the supervision and monitoring of members without massive headcount cost or massive membership fee hikes, which inevitably will increase the cost of advice as it is passed through to consumers. Commercial reality vs concept management, one wonders.

Meanwhile, licensees are hardly likely to agree to the concept of dual licensing with an association body as already mused by the FPA That would be a commercial nightmare. Imagine it from a licensee’s perspective. Carry the liability, ensure the paperwork is correct, the Corps Act isn’t breached, all the disclosure documents are spot on, the APL functions, research is first class, education is provided, the quality of advice is accountable, the templates are up to date and recourse for consumers is in place alongside PI. By the way, you can outsource the monitoring of all this to an association that accepts no liability but can oust the adviser and the licensee pays for damages.

It’s hardly a positive endorsement for consumer protection, although we can accept it’s a bit of left field thinking by the associations grappling with the idea of commuting hundreds of years of a professional association legacy into a whirlwind five or 10-year plan.

Therein lies the heart of the reform issue. What lies in await is the largest impost of all – the impossible nature of creating an overnight success funded by the private sector primarily for the benefit of the community and the Government.

One wonders what would happen if the licensee association (it doesn’t exist) simply rejected the whole fiasco, said it’s not going to play ball, it’s not going to enforce any ethics standards or be accountable for all the grey murky statements or any the vague implementation requirements, but it will hand over the role to FPA or an equivalent body. There would be chaos!

The fact this reality exists highlights how complex and challenging life has become for the advice fraternity and licensees of the future – should they choose to exist. Will licensees be nothing more than part time, bit players with minimal role to play other than being good buying group syndicators offering scale in a relatively non-scalable industry?

Where we are heading? The economics don’t make sense if the liability stays with the licence holder.

Moaning about things going wrong when there’s a need for discussion about what’s required isn’t progress, of course, so the opportunity for thought provoking leadership is emerging from the heads of licensing groups and this may have an opportunity to start at a forthcoming licensee conference being hosted by Connexus Media in June.

One can but hope that good ideas, stimulated by a supportive environment attended by licensee heads will produce some practical tips for the regulator, the government and the associations.

It’s going to be needed because the first immediate challenge is bringing back trust and integrity into the advice landscape – not looking for food scraps with licensing services. To do this we are all going to need to hold hands at RM level and focus on being co-operative competitors. The first notion of real progress is changing ourselves of course, and the climate could not be better.

First published: 30 May 2018

Written by Ian Knox. The view expressed are his own.