The AIOFP and its members have begun the lobbying process to amend section 923A of the Corporations Act, following ASIC’s shock decision to crack down on the non-aligned advice sector.
Yesterday, ASIC released its opinion that financial advisers who do not meet the strict criteria stipulated in s923A can no longer describe themselves as independently-owned or non-aligned despite ownership structures, after receiving “external legal advice” on the matter.
The development sparked considerable debate in the comments section, alongside an ifa editorial arguing that ASIC’s interpretation will reduce the competitiveness of the financial advice market and ultimately harm consumers.
Members of the AIOFP, most of whom are AFSL holders who have described themselves as independently-owned or non-aligned for decades, raised particular concerns about ASIC’s “clarification” and the impact it would have on their advisers and clients.
AIOFP executive director Peter Johnston told ifa that the association will now be formally lobbying the federal government and cross-benchers for repeal of the legislation.
South Australian senator Cory Bernardi, who recently defected from the Coalition to establish the Australian Conservatives party, is being sounded out a potentially sympathetic and influential ear in the Federal Parliament. Senator Bernardi ran a self-licensed financial advice practice in Adelaide before entering Parliament.
“What must be understood is that ASIC are the police of the industry who enforce the law, not the law makers,” Mr Johnston said.
“We need to convince the politicians that s923A is unworkable unless you circumvent the spirit of FOFA by using SMSF funds to sell direct property to clients.”
The lacklustre performance of CPA Australia’s s923A-compliant licensee, CPA Australia Advice, has demonstrated that the business model implicit in ASIC’s definition is not viable, Mr Johnston said.
Shartru Wealth chief executive and AIOFP member Rob Coyte, one of a number of licensees with whom ifa spoke yesterday, indicated his dissatisfaction with ASIC’s approach.
“[Section] 923A is archaic and needs to be updated to reflect that whilst an adviser may be remunerated different ways the disclosure requirement deals sufficiently with this,” Mr Coyte said.
“If we cannot differentiate ourselves from CBA by a meaningful term then the system is broken.”
ASIC has informed the AIOFP that its members will now only be allowed to market themselves as belonging to the association alongside an accompanying disclaimer.
The AFA has also expressed verbal support for amendment of the legislation, while the FPA has welcomed ASIC’s clear guidance.
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