Brogden criticises car hand-outs

Mr Brogden, the chief executive of the Financial Services Council, compared the privileged treatment of the car industry with that of financial services.

Financial services were facing a revolution with the Future of Financial Advice legislation before Parliament, he said in an address to the Deloittes Leadership Series lunch in Sydney yesterday.

"That this revolution will take place in poor markets and ongoing international uncertainty is no joy, but simple reality," he said.

"So the performance of Australia's largest sector is critical to the Australian economy.

"Governments need to understand that, and they need to remember that, unlike the unsustainable car industry - an industry that has been subsidised by the Australian taxpayer since 1908 and for every year without exception since - we don't have our hand out for money."

Financial services sector was the biggest single sector in the economy, responsible for 10.6 per cent of GDP and employing 428,000 people, he said.

Speaking later to BusinessDay, Mr Brogden said that unlike the car industry, large profits from financial services remained in Australia, through superannuation.

"It's an extraordinary frustration that a declining industry like vehicle manufacturing instantly gets government attention and talk of more subsidies, yet financial services ... is regarded as a pariah because of its decision to be efficient," he said.

On the proposed finance reforms, he said the government was discussing with industry a transition period before the legislation's introduction in July.

This would either be a hybrid approach, where some measures started in 2012, others in 2013, or where early adoption was encouraged, but there were no penalties for non-compliance.

The Financial Services Council has estimated the costs of implementing the reforms at $700 million in the first year and $375 million every year after that.

The sector covers financial advice, life insurance, funds management and superannuation.

In key markers:

The number of financial advisers fell 1.7 pere cent last year to 15,500, the first decline in 12 years and compared with 2 per cent growth for most years.

Funds under management peaked at $1850 billion in June, falling to $1790 billion in September. Funds flowing into the sector grew $30 billion over the year to September.

Money paid directly to superannuation funds, which reflects discretionary contributions, last year was $5.5 billion or 25 per cent lower than the level before the global financial crisis.

Life insurance growth continued, with premium inflows in the year to September up 11.5 per cent, to $10.2 billion.

Mr Brogden predicted that mergers and the increase in the superannuation guarantee to 12 per cent would create Australia's first $100 billion super fund, and a group of leading super funds with more than $50 billion in assets in the next five years.

The largest super fund at the moment is Australian Super with $42 billion in assets.