The number of Australians with complex financial advice needs will grow by 70% in 25 years - from 4.3m to 7.2m. However, regulatory design has favoured default settings and ignored Australian consumers requiring more complex and personalised financial advice, said the Financial Services Council (FSC).
In a statement, the FSC said that as people get older, their financial circumstances become more complex, due to changes to wealth, debt and dependants. However, superannuation regulations and legislation are overwhelmingly designed with simple, default arrangements in mind.
FSC CEO Blake Briggs said, “The current ‘one-size-fits-all' approach to superannuation regulation prioritises simple, default arrangements, adversely impacting the 70% of the market characterised by engaged consumers making investment choices and supported by financial advisers.
“Australia’s regulatory framework needs to evolve to accommodate the superannuation funds, investment platforms, and financial advisers that cater to Australians with more complex financial needs.”
The FSC has released a framework for regulators and policymakers to consider how the current focus on default products has impeded best-practice regulatory design. This includes examples of regulations that were designed with default settings in mind that are ill-suited to industry participants that cater to more complex advice needs.
“A more sophisticated approach to financial services regulation would promote competition and reduce regulatory cost and complexity for choice products and expand consumers’ access to financial products that better suit their personal needs,” Mr Briggs concluded.
The research examined five areas of regulatory design that could evolve to reflect consumers and industry solutions that focus on consumers with more complex advice needs.
The full report can be accessed on the FSC’s website here.