On Friday (5 November), ASIC issued an information sheet on ROAs, which includes guidance on when and how they should be used, as well as details on preparing and keeping ROAs and possible exemptions.
“This is the first of ASIC’s initiatives developed in response to the financial advice industry’s recent feedback on our consultation to improve consumers’ access to affordable advice,” ASIC commissioner Danielle Press said.
“We expect this practical guidance and information will provide clarity and certainty to financial advisers about when and how they can use ROAs.”
The ROA guidance comes after ASIC sought consultation from advice industry participants about factors impacting the supply of quality financial advice.
It’s understood that ASIC received 466 submissions from the industry and relevant stakeholders.
Ms Press said the regulator is committed to supporting the advice industry to ensure Australians can access quality advice at reasonable prices and that it will continue to engage with the sector to address concerns surrounding “cost and regulatory uncertainty”.
The guidance comes as ASIC gears up for its new responsibilities of the recently passed Better Advice Bill that will see the financial services and credit panel within ASIC become the single disciplinary body for advisers from 1 January 2022.
A new report released this week by research firm Investment Trends found that communication around regulation is one of the biggest areas of concern for advised clients.
The study shows that actively advised clients want to see improvements in the communication of changes to rules and regulations, as well as education around investment strategy.
“Advisers are increasingly required to play the role of educator and financial coach across a growing range of financial topics,” Investment Trends’ associate research director Kurt Mayell told ifa.
“More than ever clients are expecting content delivered to them proactively to assist them in implementing their chosen investment strategy while enabling them to keep abreast of the rapidly evolving rules and regulations that may have implications on their financial situation or investment portfolio.”
The sample RoA for a stockbroker that switches a bank stock with CGT implications and broking fees is a joke. The broker has a phone call, and after attending a research seminar suggests to the client over the phone to implement a trade and it’s time critical so you just do it and move on. Yet the hold RoA within a platform involves three times as much work, a client signature and a repeat of the persons situation.
Ms Press said the regulator is committed to supporting the advice industry to ensure Australians can access quality advice at reasonable prices.
So over the last 5 years, ASIC and Treasury have worked together to put in place the most unworkable bunch of rules and regulations one could imagine, and they now think that a bit of guidance around ROA’s you will help fix this mess you have created?
Ms Press, you are completely missing the point.
1. Using the example in the guidance, what is the value and purpose of this ROA? Does it help the client, does it help anyone except for creating more jobs for ASIC when they want to look back through files trying to find a reason to ban the adviser?
2. If I was an unlicensed financial coach, I could have told the client all of this information AND not need to provide them with any paperwork. So again, what is the purpose of the ROA?
Ms Press, I know you won’t, but instead of kidding yourselves that you are helping, do a major overhaul of the regulatory requirements and cut out all of this BS. Advisers should not have to do 10x more paperwork than surgeons.
I believe the answers are as follows: –
1) ROA’s are a very effective tool to ensure Financial Planners not aligned to Industry Super are slowed down in transferring FUM from Industry Super.
2) Unlicensed Advice very unlikely to target the FUM of Industry Super so not much of an issue for ASIC. If it does target FUM of Industry Super (or make similar high return claims) then watch out.
I could be wrong – I’m just guessing. Perhaps Daniel Press could answer – but her normal answers to question in Committee hearings seem to be she knows nothing.
If, in 2021, you don’t know what the purpose of a record of advice is can I suggest finding a new job? Thanks.