Financial advisers operating as small businesses have pleaded with federal politicians to reconsider the extent of regulation being imposed on the industry in the wake of the Hayne banking royal commission.
Association of Financial Advisers national president Michael Nowak says financial advice has become increasingly costly to provide and more complex, and is becoming out of reach for many Australians.
He told the parliamentary economics committee many advisers have closed their business, some suffering with mental health issues.
"Financial advisers have left the profession in droves," he said.
There were nearly 29,000 advisers at the time of the royal commission, but that has since fallen to just over 19,000.
"Our message is the balance must be re-established between regulation and consumer protection to ensure financial advice remains viable to the average Australian," Mr Nowak said.
"We believe the system is now broken and the most critical impact of all this is financial advice has become inaccessible and unaffordable to everyday Australians," he said.
And he said there is even more legislation in front of parliament at this moment, potentially driving up significant additional costs.
Mr Nowak believes financial advice has never been more important than the last 18 months during the COVID-19 pandemic.
He conceded the financial advice industry has been impacted by scandals in recent years, resulting in the banking royal commission recommending what it saw as necessary reforms.
But Mr Nowak said the focus of the royal commission was on the conduct of big institutions rather than small business financial advisers.
He said the cost of running a small business financial adviser service has increased markedly, with licensing fees as much as $70,000, indemnity premiums rising significantly and the levy to the Australian Securities and Investments Commission trebling to over $3000.
"Seemingly, small business financial advisers are continuing to pay for the legal action taken against the large institutions following the royal commission, despite the fact the big four banks have exited financial advice," Mr Nowak said.
"This is an extraordinary burden to expect from small business."
Australian Associated Press