ASIC said the new guidance is an important step for the industry as it currently is monitoring 64 remediations that will see the return of about $5.4 billion to over 5.6 million consumers.
“Recent experience has shown that poor conduct has significant financial implications for companies, their investors, and ultimately their customers,” ASIC deputy chair Karen Chester said on Wednesday (17 November).
“This is demonstrated by the costly lag and drag of remediation and reputational damage.”
ASIC said its new guidance has expanded to cover financial services licensees, credit licensees and retirement service and will set out how remediations should be conducted efficiently and fairly.
Ms Chester added that licensees must do better at identifying and remediating problems earlier.
“One of the most common stumbling blocks we have seen across remediations is underinvestment in systems,” she said.
“This underinvestment has led to multiple failures. First and foremost, in delivering on promises to consumers, second in identifying the failures and third in being able to remediate consumer loss in a timely way.”
In December last year, ASIC revealed it was monitoring over 100 remediations that, when finalised, could see the return of at least $3.55 billion to over 3.6 million consumers.
Feedback on the new draft guidance can be submitted by 5pm on Friday, 11 February 2022.
And yet the property spruiker with no formal qualifications or authority can recommend to establish a SMSF to purchase a $300k property in Munno Para for $340k, without any recourse when after 5 years the property is valued at $290k (factual client experience).
That’s because the extra $40,000 in the purchase price included an added $10,000 commission and a 5% rental guarantee for two years all stacked on top of the purchase price. When the two years is up the renter is no longer subsidised by the 5% ( the agent pockets the actual rent amount and pays the buyer the 5% rent from the buyers own purchase price) and rents go back to ‘normal’ and the value of the property drops accordingly. Look into this ASIC as these are all sold as ‘positively geared investments’.
So the big players have the biggest remediation bills but since they’ve left the market (for the time being) the good advisers that are left are the ones that have to pay.
I’m not a supporter of said insto’s but how do you conclude the remaining advisers are having to pay? The one thing the big guys have done well is pay their remediation bills, probably more than they had to
Hey ASIC you changed the rules retrospectively to include a ROA/SOA although it was never in the agreement, and forced us to refund money to clients that they didnt want or ask for, its a bit hard to get a system to tell the future or to tell you what ASIC will think of next to try to send us broke. Great work ASIC woof woof
So you are saying you were charging an ongoing fee and not providing an ROA or SOA? Then 100% you should be forced to repay that
Hey anon, an annual roa or soa was not included in the csa at that stage, these advice documents were separate and only charged for when required, ie change of goals, objectives, financial position, fees reflected that, what dont you understand about that?
What I don’t understand is why you thought it was appropriate to not offer advice in an ongoing advice relationship when ASIC have had it in their guidance that it was required for over 10 years
A ‘CSA’ is a client SERVICE agreement not a client ADVICE agreement…
I think the fact you are trying to circumvent the ASIC guidance through semantics speaks volumes. The fact is that under ASIC guidance issued many years ago there is no such thing as a CSA, ANY ongoing fee arrangement MUST include at a minimum an ROA each review year
Asic was the most responsible entity throughout the saga.
This is just a lip service CYA in a long list of CYA’s that have damaged the industry.
Without knowing the details I am comfortable it is another nail in the coffin of my financial planning business and that of my licensee. Time to keep transitioning.
When you get tired of transitioning, you can then start to pivot.
ASIC’s answer will be to appease the federal Liberal government and make the advisers responsible for more things, and let the Big Banks off.