Kate Metz, ASIC senior executive leader for financial advisers, flagged that ASIC would soon be putting out a consultation paper to determine the obstacles the industry faced in providing limited advice in an attempt to overcome the burgeoning advice gap.
“Time and time again we hear from consumers that they want to be able to access affordable and limited advice,” Ms Metz told the AFA Vision conference.
“We also know that some segments of the industry find it really hard to provide.”
Ms Metz touted research from 2010 as evidence that the regulator had been working towards improving advice access for some time and said that while “a lot of the thinking in that work is still reasonably current”, ASIC wanted to hear about what it could change – while also calling on the industry to do more.
“The reason why I say that is because ASIC has given guidance in the past saying that we really support limited or scaled advice, we’ve given examples, and we are hearing from some quarters that licensees don’t really want advisers in that space,” Ms Metz said.
“I don’t know how widespread that is but it is certainly a view we have been hearing more frequently.”
She also said that advisers should be more willing to provide limited advice and shouldn’t wait on ASIC to give the go-ahead.
“There’s this misapprehension that ASIC is there to crack down on everybody,” Ms Metz said.
“Where we take action against people it’s for really egregious conduct. The vast majority of financial advisers do the right thing. We want advisers to use their professional judgement. We want advisers to be able service their clients in a sensible way. We don’t want to see long documents, we don’t want to see 80-page SOAs.”
But Ms Metz also conceded that ASIC needed to do more by simplifying some of the guidance it had given and that it was looking actively at better ways to communicate with industry participants.
Perhaps Ms Metz should actually speak to Advisers – especially those who’ve been spoken to by ASIC. They come in hard and fast with all sorts of (incorrect) assumptions and accusations rather than asking questions about things they don’t understand. What else would you call handing someone I know a banning-hearing demand based on an Analyst’s incorrect calculations (gearing costs are tax deductible, Junior) and misunderstanding (just because someone calls their Fund “Balanced” doesn’t actually mean it’s a 50/50 growth/defensive split, especially when it’s an industry fund with a 86/14 split); AND using 2007 guidance to state a recommendation is incorrect – by 2007 guidance standards not 2020!
Sorry ASIC I’m currently involved in a Westpac’s fee for no service program. They’re responding to your report from 2015 and asking for files from 2009 for the two years I was licensed under these crappy licensee’s. I too need Five years to respond.
Kate Metz, ASIC senior executive leader for financial advisers, flagged that ASIC would soon be putting out a consultation paper to determine the obstacles the industry faced in providing limited advice in an attempt to overcome the burgeoning advice gap. ========== more intra fund advice crave outs…. more robo advice to allow financial Instos to sell directly to customers watch this space they are trying to limit competition just look what they tried to do to the mortgage brokers
So maybe ASIC, FASEA (if you can contact them) the AFA, FPA and Senator Hume should get together and sort out this mess. Oh wait the blame game will start like the Victorian security Guard debacle and no one will remember who signed off on what!! Dare I say bring back some common sense actually speak to advisers who are out there and get the real picture. We are sick and tired of looking over our shoulders every time we write an SOA hence simple risk blows out 40,50,60 pages it’s just a bum covering exercise. The clients don’t read it and we are told to print an executive summary so it is easier to present, so they can put the SOA in the bottom draw there’s a waist of 8 hours and heaven forbid you charge a fee that your client does not think is “reasonable and fair” because the regulator thinks we live off love and fresh air. Stand up and be counted Hume and for once be in the corner of those who look after the Joe average because they care!!!
Maybe ASIC might be able to reduce the length of their RG’s too……RG 175 relating to SOA’s is only 121 pages!!
Well the comments started off nicely, but quickly they descend into blaming advisers. We’ve been down that road before. If they do consult with advisers, it will be a first and some home truths will be delivered. But I am skeptical. I recall the ASIC/Treasury FOFA ‘consultation’. What a sham that was.
ASIC missing the mark again …. Who cares about an 80 page SOA we have been doing them for the last 20 years ….. How about looking at the 80 pages of pointless research and file notes that need to be completed before we even get it to SOA production …..
Are ASIC kidding? They can’t be trusted not to go after someone who hasn’t dotted an i or crossed a t.
Plus the revenue from a small scaled advice is not worth the risk when AFCA is free for consumers but costs money for advisors.
ASIC has failed with its “Big Stick” approach and is now joining with the Product Providers and larger AFSL holders, in blaming Advisors for the all of the woes of the Royal Commission and now the “Price of Advice”.
Failure usually results in a clean out but if we wait for the politicians to get off their hands and act. I am afraid I will be a great deal older.
“There’s this misapprehension that ASIC is there to crack down on everybody” – 10 year look backs sounds familiar? Licensee’s are running scared.
“calling on the industry to do more.” – what, where you let a complete a code of ethics to be introduced to the industry, that completely stifles any ability to provide easy & succinct advice.
“There’s this misapprehension that ASIC is there to crack down on everybody,” – Right, because if ASIC don’t get you AFCA certainly will, especially with the code of ethics.
You could keep going all day with some of the BS that comes out of ASIC. The Industry has been telling you for 10 years the regs are killing everything. Look what you did to the Life Insurance industry with LIF.
Consult with some actual Advisers FFS! Not licensees, not industry super, not product providers, certainly not academics or “consumer” groups.
The fact that the organisation hasn’t been able come up with a single comprehensive SoA example since FSR was introduced tells you everything you need to know about the state of affairs.
ASIC has already made advice simple, just follow the steps
1. publish 300 regulatory guides with thousands of individual rules that dont necessarily line up with legislation and generally reflect the views of people who have never worked in the industry, like government lawyers … Done.
2. Give clients complete immunity and ensure that advisers are blamed and financially accountable for any minor issue that may arise … AFCA, yes, done!
3. Create a new regulator who is separate to ASIC, who loads more rules on top of the ones that already exist. These rules can also conflict with ASIC’s interpretation, and dont respect legal rights. This new regulator can be ethics based, but designed by people who have no understanding of ethics or financial services … FASEA, yes, DONE!
Advice must be simple, ASIC have already fixed it.
It is a cross between a D Grade Horror movie and a sad take on a Monty Python Movie. :- /
Seriously it is beyond comprehension how stuffed up ASIC and the Pollies are.
It’s that freaking stuffed no one in Canberra wants to have anything to do with it.
SO LET’S DO THAT SAME AS EVERY OTHER SITUTAION AND BLAME ADVISERS !!!!!!!!!!!!!!!!!!!!!
[b]It’s always Advisers Fault, Anything and Everything is Always Advisers Fault. [/b][b][/b]
I would suggest that it is almost impossible to give limited or scaled advice. Take giving limited insurance advice for example. We have to consider other areas that are relevant and then decide if they are significant. In the case of insurance, this more often than not means reviewing what default covers a client already holds in superannuation, plus we will need to advise on whether any new covers are held personally or in super. So now we have to include superannuation in our limited advice, and as we could funding premium from super, we need to look at the effect on retirement savings. So now we need to look at super contributions and affordability, which means we need to review the client’s cash flow and budget. If we make top-up super contributions to pay for the premiums, we need to now look at how the client should contribute to super and tax consequences. Of course, then there is the Binding nominations for insurance and/or super, this part I would consider relevant and significant. I mean what is the point of insurance if it doesn’t end up in the right hands? So now our limited insurance advice includes Super, super contributions, cash flow, and estate planning advice. The same goes the other way around if we try to give limited super advice and the client holds default insurance covers. We really can’t provide advice without taking into consideration the cost of the premiums and therefore the circle goes right back the other way! I could go on, but I think you get the point.
ASIC’s own guide RG 244.10 “For example, our research found that some advice providers excluded the consideration of a client’s debts from their retirement advice. However, if these debts were significant, retirement advice could not have been properly provided without taking this into consideration. In such a situation, a client might mistakenly think that the advice about their retirement was comprehensive and that all of their relevant circumstances had been taken into account.”.
You totally nailed it. Good Financial Advisers understand one decision can have a domino effect in other areas. Hence, limited scope sounds great in principle but in practice it’s never that straight forward.
If this is TRUE and actually happens then thank GOD! Adivers are drowning in RED TAPE!! Even ROA’s with all the extra file notes, research, and info are ending up at 30 pages of stuff that has to be loaded to xplan!
Lol have ASIC officers turned into PDMs now? What a change of heart!
In their rush to penalise and over regulate everything that moves, some ASIC officers may soon find themselves out of work. You can’t regulate advisers who are leaving in droves – they’re no longer there!
Wow, you are taking your time publishing comments.
Fundamentally limited advice is at odds with the FASEA code of ethics (standard 6) and who in their right mind would be challenging that?
The reason everybody is getting out of the industry is because the government created an impossible environment to exist. Until the government makes some serious changes to the ridiculous decisions it’s made it won’t have an industry to regulate very soon.
Hilarious… perhaps the regulator could given us a page limit and we could work towards it (like an assessment). Of course the simplest solution would be to just reduce the font size. We could also do 5 page SoAs and incorporate everything by reference (although this would be just moving info from one doc to another). The regulator is so out of touch.
Affordability of advice is (and has been) driven by the regulator and govt – not the size of SoAs and advisers wanting to write long documents.
No matter where you sit, licensing is more, PI is more, education is more – all driven by successive govts and regulators. Virtual integration whilst insidious in some regards did make advice more affordable to more people.
Seriously they created this bucket of mess or is it a way of ASIC saying we stuffed up and now we need your help to get it back to some normality.
It is all the arse covering you need to do in order to scope advice that takes time as well. Not sure FASEA and their standards look kindly on scoping advice without detailed validation and there is uncertainty on this process I feel. Where there is uncertainty you err on the side of caution due to the risk of doing it wrong.
Combined with all the other issues and time-consuming processes we need to do, scoping advice is just one of the reasons for increasing costs. Just waiting for our friends in ‘no win, no fee’ land to have a field day with all the different legislation, guidance and standards we need to adhere to.
Blaming licensees for the cost of advice is a bit rich and shows how out of touch ASIC are.
You know, I think this presentation was targeted at Mr Wilsons committee.Its not what they say to Licencees
The bottom line is if a TRADIE comes to me and asks for income protection advice ONLY ( says he is happy with the life cover in CBUS) I should be able to advise on IP only, without leaving myself, and my licencee, exposed to litigation, allegations of breaching the FASEA Code , unreasonable decisions from AFCA, and “lookback” audits from ASIC.
And charge a fee commensurate with the level of advice requested
My tradie wants to limit my advice to ONE SPECIFIC MATTER. He wants a 10 page SOA, not 30 as it is today. Remember the last ASIC risk SOA
Risk specialists should be made separate to this nightmare!
And yes, I expect the “newbie” investment advisers who think risk is easy will TROLL in!
My most recent stock standard risk SOA was 58 pages long. Yes – 58. It needed to be that long in order to meet my licensee requirements.
Therein lies the problem. Licencees and their compliance teams. They have totally taken RG175 and added extra pineapple and anchovies to make it a super supreme. And would you like some FASEA code of ethics and FPA code of conduct with that?
These types of transactional relationships are gone old risky. Probably now in his best interest to send him to a TV commercial. Best interest advice, fiduciary obligations would require you to widen your advice.
Yes ASIC those segments that follow the BID rules can’t provide quick and reasonable priced advice. Your overzealous prosecution of the slightest failure of the unworkable BID rules has resulted in the increase in the price of real advice, not this rubbish general advice union funds provide to retain their FUM. So the question should be to ASIC, what are YOU doing to improve the situation. YOU created it.