AFA acting chief executive Phil Anderson told ifa the disciplinary system proposed by the government under its draft legislation released last month would see ASIC required to convene its Financial Services and Credit Panel (FSCP) for all levels of breach of an adviser’s legal obligations or the FASEA standards.
“We’re concerned about the low level type matters that might end up being considered by a FSCP that could lead to a very substantial number of matters, and that that will then drive up costs,” Mr Anderson said.
“In our view, it should only be the significant or serious matters that end up in front of a disciplinary panel. There’s no point having them look at someone who has missed their CPD target or someone who has got a minor issue with respect to inadequate documentation or compliance with one of the seven steps in the best interest duty safe harbour.”
Mr Anderson said the AFA had pushed for more clarity around the levels of breach that could be considered by the panel in its submission to the government’s consultation, and warned that if the panel needed to assess even minor offences, additional costs to the industry “would be substantial”.
“We understand that the purpose is to put in place a range of other disciplinary measures other than bannings, but that should not be dealing with administrative matters – that should be dealing with more material, significant matters,” he said.
“Licensees already have that role and where those things are identified and they need to be remediated, that is the licensee’s responsibility. We want this to be focused on more serious matters and if that’s the case, the cost of this will not blow out.”
While the corporate regulator had had its funding reduced slightly from $772 million to $717 million in this year’s budget, Mr Anderson said the association expected additional costs on top of these figures to establish and run the disciplinary body.
“At the aggregate level you don’t know how the funding flows through to the parts of ASIC we take most interest in such as the adviser section, and you compound that by saying the disciplinary body regime is supposed to start from 1 January, so what is that going to mean for resourcing requirements and needs,” he said.
“It’s not hugely clear to me how that’s been taken into account. There will be a registration fee for financial advisers, but I don’t expect that is going to be the sole mechanism of funding the disciplinary body – there will be a provision for increasing the ASIC funding levy.
“And based upon the draft of how it would operate, they would be looking at a very large number of matters so it would be a key driver of costs.”
The AFA need to hire a Financial Adviser as their next CEO rather than a career CEO.
make it $50,000 pa for membership of the mandatory body. ha ha .
Compliance with all seven of the safe harbour steps for BID is not a legal requirement. It is just one way of demonstrating compliance with BID. The fact that many dealer group compliance departments insist on it doesn’t make it enforceable by regulators.
If this truly was a [b]single[/b] disciplinary body, it wouldn’t be so bad. That would mean advisers were freed of the costs and overhead of ASIC, AFCA and licensees. But it’s a [b]fourth[/b] disciplinary body on top of those.
Why is anybody calling this a single disciplinary body ?
AFA, IFA, anyone should not Refer to this as a single disciplinary body.
Unless all the rest of the disciplinary bodies cease, AFSLs, AFCA, etc
ASIC seems to be making more and more irrational decisions. Is there a pattern here apart from the fact that we pay for all their decisions?
Lunacy.
Massive cost impost vs insignificant damage done.
This should be the mantra of the Royal Commission farce and ASIC look back and fee for no service theatre.
These activities merely provide highly rewarding occupations for bureaucrats peddling an ideology.
If this is the standard to be applied to advisers then this same standard should be applied to ASIC, politicians, lawyers and doctors etc.
We know the results would be shocking.
ASIC’s head man was found wanting , no more need be said.
Let’s face it, the current Federal Liberal government are out of their depth and have no clue about financial services. It almost seems that inflicting carnage on small business is their objective.
So what was the point of doing FASEA, Grad Dip or above and everything else to reach the nirvana of a true profession? More and more policing will only mean less and less advisers with those of us remaining carrying the increasing costs of a shrinking pool, like being stuck in a legacy product. The oversight of our industry is in the hands of amateurs and while it’s nice to hear from the AFA (nothing so far from the FPA) it’s all far too late. We needed you to stick up for us years ago instead of throwing us to the wolves.