Recent responses to questions on notice from Coalition senator Amanda Stoker revealed ASIC did not plan to take any enforcement action as a result of its Report 639 on the quality of super advice, which found just 49 per cent of super fund advice files reviewed were fully compliant with the best interests duty and other obligations.
The regulator had said this was because, unlike its earlier Report 413 into risk advice that led to the LIF reforms, it now distinguished between breaches that were likely to cause financial detriment to a consumer and those that were not.
AFA general manager of policy and professionalism Phil Anderson told ifa the association had engaged with the regulator to ensure it adopted “a consistent approach” that took account of these new reporting processes during its review of LIF commissions, scheduled to take place this year.
“Our view on ASIC and Report 639 is that they need to apply a consistent approach when they undertake the LIF review this year and if that review generates a result similar to the 49 per cent pass rate in 639, then they should express similar views as opposed to how they responded in 2014 to ASIC report 413,” Mr Anderson said.
“In our view ASIC Report 639 sets a benchmark for what is an acceptable outcome from the LIF review. We have made these points in our discussions with ASIC over the last year.”
Mr Anderson suggested the regulator’s recent comments left open the possibility that the reforms may not have been necessary, had advice files in Report 413 been judged by today’s standards.
“It was known that ASIC did not look at client detriment when they did Report 413, and therefore with an overall fail rate of 37 per cent, the amount of detriment would have been much less,” he said.
In Report 639, while 51 per cent of super advice files had been non-compliant to some degree, just 15 per cent had been found by ASIC to be non-compliant to such a degree that they could cause consumer detriment.
However, Mr Anderson said the experience of AFA members did not suggest the regulator commonly made this distinction when auditing advice files as part of its ordinary surveillance.
“It is not our experience or expectation that ASIC would largely disregard procedural, disclosure or record keeping non-compliance,” he said.
“This is a large part of what has come out of Report 515 [on institutional oversight of advisers] and compliance with the best interests duty safe harbour and the extensive intervention that arose as a result of that. This report drove substantial changes in the processes of the large institutionally owned licensees.”
Because this is the problem – the overarching attitude of those in ASIC at the coalface of decision making over who gets brought in for interrogation (sorry, “assisting with our enquiries”); or who gets banned and their lives destroyed, is ultimately one of power-seeking, uneducated and inexperienced opinion-making. Being told by an Analyst who demonstrates through their written opinions and questions that they have no experience or knowledge over the subject matter that they’re judging an Adviser on, or suggesting be banned is a clear indicator of the quality of regulation that exists. Being belittled and pre-judged by a supposedly unbiased, impartial and “independent” Advocate is just another where presumption of guilt is far more than any presumption of innocence, or that one is innocent until proven otherwise. ASIC need a complete overhaul in terms of their behaviour, attitudes, toxic culture, and hiring practices.
Ban all upfront and ongoing retail risk commissions and kill off the risk adviser for good. And then industry fund group insurance can replace that space which means bad luck for risk advisers, bad luck for consumers but happy days for group insurers!
You can see the future, at least you have another job as a psychic lined up when this does happen.
and we see ASIC trying to create more carve outs for Industry super funds, via scoping changes.
A Senate enquiry into the secret internal workings of ASIC is well overdue.
Good on you AFA for questioning this double standard by ASIC. Silence from the FPA and the Licensees. These changes made by Licensees in response to ASIC’s reports have resulted in huge loss of profits for many small business practices.
These are excellent comments by Phil Anderson.
If we now can get rid of product providers employing commercial salesforces (their advisers as per AMP’s de Ferrari), then ASIC will have no reason to continue behaving the way they do with their eternal lookbacks.
REGULATORY CAPTURE CORRUPTION BY ASIC YET AGAIN. DIGUSTINGLY CORRUPT IS ASIC.
We should all know by now that anything to do with Industry Super is automatically cleared as fine by ASIC.
And we should all know that anything Real Adviser do is automatically requiring more BS REGS by ASIC.
[b]A level playing field with Real Advisers and Industry Super = TELL HIM HE’S DREAMING !!!!!!!!!![/b][b][/b]
Curious that ASIC only considered detriment when it was Industry Funds being reviewed.