In a recent webinar for the FPA’s Virtual Congress, ASIC commissioner Danielle Press said the regulator had “started a number of conversations” with licensees and industry representatives around the possibility of releasing a template SOA to provide better guidance around what compliant scaled advice would look like.
“Obviously that is difficult because things are going to turn on the facts of the situation, but I think for us to say our guidance is clear just because we think it’s clear is the wrong answer, because clearly the industry doesn’t think it’s clear,” Ms Press said.
She added that there was “hesitation to give scaled advice” across the industry, and that ASIC wanted to work with licensees to give them more confidence rather than restricting advisers from delivering important services to consumers.
“We don’t think the guidance stops you giving scaled advice,” Ms Press said.
“Some licensees don’t like it and think the risks are too great and go back to an interpretation of the law, so that’s where we need to take a step back and say what is it that we’ve said in the way we interpret this that’s getting in the way, because our position is that scaled advice is generally the right thing.
“So how do we make sure that industry feels safe enough to execute on that and not have this need to take it another 25 per cent on top of what the regulator has said just to make sure they’re not going to be in trouble.
“Obviously it’s a matter for each licensee as to where they want to place that bar, but what we don’t want is that bar to be placed so high that the advice industry collapses under the weight of regulation.”
Ms Press said recent SOA relief around early super advice was providing a “test case” to ASIC around further red tape reduction in the advice space.
“We are looking at what the outcome of that has been – have we seen that relief providing equally as good advice to clients, equally good outcomes, and if they have, what does that mean for our regulatory setting and potentially law change?” she said.
“This has been a really interesting test case for us and we will be looking closely at some of the advice that has been given under some of that relief so we can have some data to say ‘actually we can do this differently going forward’.”
Its actually scary how little it appears Press appreciates the environment we operate in. She says that the regulator doesn’t demand 40 page documents, so licensees shouldn’t be enforcing them as by definition they abide by the law. However she totally ignores the fact that we have 3 other ‘regulators’ in AFCA, PI Insurer, and FASEA. Advisers have to make sure they meet the requirements of all of these, and that’s why licensees run scared. That Press doesn’t understand this is an indictment.
I’m not taking the professional risk of providing advice to anyone for only $300.
I welcome the fact ASIC is looking at this and recognising their guidance has been unclear.
If they want a template for scaled advice….. we had one that was very effective. It was called a Customer Advice Record.
Why reinvent the wheel?
A CAR should be able to be used for simple advice scenarios. Perhaps limit it to investment / super and pension transactions under $100,000, Insurance Premiums under $3,000 per annum and the proviso that the CAR deal with single strategy only.
Also reincorporate the old Replacement Policy Advice Record.
Finally limit remuneration received from CAR advice to $2,000 wich is 2/3rds of the minimum cost for a new SOAS according to recent research.
ASIC (FARSA TPB etc) has absolutely no idea of how advice actually works – nor an understanding of the corporation act- sure you can provide scaled advice until some bottom dwelling lawyer decides that it wasn’t appropriate.
It would appear we now need to ensure each and every client signs disclaimer/warning – stating withdrawing money from account will reduce balance.
PLEASE READ BELOW AND LET ALL INVOLVED IN ADVICE
Financial planner found negligent in failing to warn client of overspending (QLD), 27 July 2020
The court found that the duty was to warn a client about the imminent dangers that would be caused by the client’s proposed interference in the adviser’s investment plan by the withdrawal of capital. [2020] QCA 152.
Judgment for the plaintiff in the sum of $1,139,178.45
Wonder how many man hours it will take ASIC to produce said document?
Don’t worry about the document, it would have taken 10+ man hours to produce the background brief that went to Danielle saying something is wrong.
When we were at Dover, their policy was for SOA to be concise. It was the right thing to do as per ASIC RG175. Dover’s advice has always been compliant, my biggest SOA for a client’s most comprehensive case was 20 pages. When Dover was shut down, there was no single bad advice, no bad compliance. Just an unfortunate pick up on the CPP, which was in my view, a minor offense. It’s simple if ASIC wants a good model for running a great license, just follow what Dover did. I’m still finding myself wondering to this day, why Dover had to shut down because of CPP.
Simple. Politics, timing and public perception. ASIC received a rap over the knuckles at the RC and the egos running ASIC couldn’t abide it, so had to make a large spectacle of the “immediate action” they were taking. ASIC is more conflicted and unethical than any AFSL that has ever existed, including Storm Financial.
Sorry ASIC that’s just more complete BS, you can’t beat the crap out of the Advice Industry with 20 years of ever increasing BS Regs, red tape, stupid 5 lots of oversight bodies, AFCA increased claims a Kangaroo Court, etc etc and say you don’t understand why Advice costs too much and is too difficult.
Absolute BS ASIC, you have driven these problems and now claim to not know why ?
Just more BS from an over the top regulator that’s only answer to anything is more BSRed tape REGS !!!!
What, I know nothing says ASIC, yep ASIC that is very true.
Agree 100% Another great development is the Parliamentary Committee is also asking ASIC why it isn’t holding itself to the standards that it holds us accountable for. These comments further verify the fact of how detached from reality ASIC approach and understanding are.