The Stockbrokers and Investment Advisers Association (SIAA) has put forward a key message that “the current ‘one-size-fits-all’ regulatory regime has to change” in its QAR submission to Treasury.
The industry body has put forward a number of recommendations including giving clarity on what constitutes personal and general advice, streamlining ongoing fee arrangements and consent requirements and changes to the law to reduce the “length and complexity” of statements of advice (SOAs).
The SIAA also addressed calls for safe harbour steps to be scrapped, saying that if it is to be repealed, the scope of what is required to satisfy best interests duty would need to be clarified and that Standard 6 of the Code of Ethics would also then need to be axed.
“While some in the industry have called for individual licensing, SIAA points out that this is not a proposal that works for its members as it fails to take into account the significant and complex capital adequacy requirements to which stockbrokers are subject,” the group said in a statement.
“SIAA has cautioned against any move to upend the regulatory framework to dismantle the AFSL system and force individual licensing upon all participants in the financial advice industry.
“SIAA also defends the role of general advice and considers that it plays an important role in the advice spectrum. Re-labelling general advice as ‘information’ does not take account of the fact that general advice must contain a recommendation or opinion to fall within in the term.”
SIAA added that the regulatory environment must be designed to accommodate consumer requirement and their preferences.
“SIAA’s members have been caught up in a regulatory regime in which regulators and policy makers have often applied a financial planning lens to the financial advice process and that has disadvantaged stockbrokers and investment advice firms and their clients,” the statement continued.
“SIAA has asked the review to consider the full range of financial advice services when undertaking its work.”
The SIAA’s submission follows a number of industry groups and businesses issuing their QAR recommendations to Treasury in recent weeks, including the FPA, AFA and ClearView.
The QAR, to be conducted by Allens Partner Michelle Levy, will be provided to government by 16 December this year.
So the SIAA want to be able to have their members recommend their clients open a SMSF without having any thought about how this fits into the bigger scheme of things…
we all have capital adequacy and PI requirements fair dinkum, the transaction % model is plain to see though (no advice) so maybe separation from corps law is the way to go for FPs, I wonder if michelle levy even uses a professional adviser ?
And a Real Estate agent can sell you a $7Mill house or commercial property in 30mins based on a verbal explanation only that it is one of the ” best investments ” the purchaser could ever make with a very clear conflict of interest and no advice document whatsoever !!!!
In addition, with commercial properties they openly promote ” terrific investment for your SMSF ” !
This is a blatant and obvious recommendation designed for one purpose only and that is to sell a property by which the agent receives a payment…therefore, a clear conflict of interest in any suggestion or recommendation.
The inequity regarding Financial Services regulatory overreach and the provision of advice and what Real Estate agents are allowed to get away with for many years is simply ridiculous.
All Real Estate agents should be designated as financial advice and should have qualifications in either residential property advice or investment/commercial property advice and be required to provide succinct, relevant documentation outlining their advice specific to that property.
The imbalance is unacceptable and should be addressed immediately.
but that whole industry is unregulated, the government has underwritten this all along since when adam was a boy … too big to fail. even in senate estimates 2020 some of our “leaders” did not even know housing and investment was unregulated and then it all went quiet.
They certainly wouldn’t want to slow property sales through legislative & regulatory impact if it meant they didn’t get their grubby mits on as much Stamp Duty as possible !!
Imagine what outcomes the real estate industry would get if they also had 13 different associations representing them…
The irony is that ASIC (quite rightly) expects us as advisers to provide tailored advice to our clients. This advice must be suitable for the client circumstances presented to us by each and every client. This is perfectly reasonable. Yet when it comes to compliance we must follow the same steps each time regardless of the many variables we see and no matter how pointless some of those steps are. What is good for us is not necessarily good for the regulators. It is certainly not a level playing field.
From the conflicted and self-interested submissions I’ve read I’m not very optimistic. A few little crumbs of reform may eventuate but nothing substantial. I’m confident they’ll be carve-outs created for certain factions, that will lead to an un-level playing field and no doubt makes it more complex for your average face-to-face adviser. Also confident Treasury will say it’s a win and we gave you a concession on education standards, what more do you want.
So the SIAA want to keep the term “general advice”, but scrap the need for their members to take into account the broad effects arising from the client acting on their advice and actively considering the client’s broader, long-term interests and likely circumstances.
Seriously. Maybe they should be pushing harder for stock brokers to have nothing to do with financial advice, but just stick to recommending stocks. No trying to encourage people to set up SMSFs to ‘have more control”.
What will the other 12 associations make of this?