Evolution of Legislation

Originally published | 2nd October 2017

A lot of advisers I speak with still long for the good old days where advice seemed easier and the compliance burden was less.

Unfortunately, because of the sins of a few, our legislation has had to evolve to protect not only the client, but ourselves.

That’s the nature of a mature society as well, where they can evolve their legislation, and their constitution, to meet the demands of the current day.

Case in point, as I write this, we are witnessing yet another mass shooting in the United States. With this there will get again be a debate about gun control and the pros and cons of the second amendment.

For those who haven’t read the second amendment, it actually states that:

“A well-regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed”.

The argument will be that this amendment is about individual freedom to bear arms, when in fact it is actually about properly formed and run militias having the freedom to bear arms if the need arose.

If the Corporations Act hadn’t evolved with the times, there would be a distinct lack of consumer protection and adviser protection in the provision of financial services.

When FSR commenced in March 2004, we saw the introduction of not only Statements of Advice but also the term “Reasonable basis for advice”.  This then evolved to our current law which is to act in the client’s best interests.

I heard a comedian talk recently about the gun debate and he essentially said that governments have to legislate to protect against the lowest common denominator.  His examples were about legislating drugs and also speed control.  It is was the speed control example that resonated with me.  His example was that it is because of the “stupid” people that can’t control themselves and would endanger others that we have speed laws.  If we didn’t legislate for the 1% these people would cause untold damage on the roads. It is the same with us, if we don’t legislate for the 1%, then we can’t protect our clients or ourselves and we would have an industry that was on the mainstream news weekly about the latest “massacre” in financial advice.