Speaking to ifa, EFS Strategic director Michael Rees-Evans said the replacement of the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal with AFCA would have “minimal client impact”.
“Most clients do not need recourse to an ombudsman or similar, and when they do the information is available on our financial services guides (FSGs),” he said.
However, Mr Rees-Evans noted where AFCA is unhelpful for clients, and advice firms by extension, is in the way they need to receive a new FSG when that may be the only change being disclosed.
He also said it is very unhelpful and bureaucratic in the way AFCA was implemented, requiring all AFSLs to have to notify ASIC by a specific date, with the effective date backdated, when it was a change imposed on advice firms.
“Overall, this seems to have been a change that only benefits the bureaucracy that oversees advice, with minimal effect on clients and yet more burden on advice providers,” Mr Rees-Evans said.
On the other hand, Thompson Financial Services director Phil Thompson said it is great that there is one complaints authority to handle all ongoing issues to do with debt, insurance, banking, investments and superannuation, replacing the previous confusing set up of multiple complaint authorities. He said his personal experience with the transition has been “seamless”.
However, Mr Thompson said he also expected the number of memberships he’s required to hold would have decreased.
“Currently as an adviser and mortgage broker, I’m required to be covered under three separate memberships,” he said.
“The financial advice licensee is required to hold a membership of which I’m covered under, my authorised credit representative company needs a membership and myself individually as a mortgage broker I’m required to hold a separate membership.”
I don’t think you can say there is minimal client benefit if the consumer gets access to free compulsory dispute resolution as an alternative to going to court to seek redress. Nevertheless, the model repeats the mistake of regulation by proxy. The model, whilst efficient for government and financial institutions is unlikely to allow the advice profession to evolve and improve practice whilst the engagement is limited to licensees rather than individuals and firms.
The easiest solution to the current flawed model is practice level licensing. It ensures that the licensee is also the employer of the adviser and can therefore recruit, monitor, and control them more effectively than the current “licensee as an outsourced service” model.
Dover 202?
dover is making a comeback in 2019
Are you suggesting that Dover will return as an advice practice with employed advisers only?
Yes it’s quite ridiculous that lenders require AFCA membership from both the ACL holder and the individual credit rep.
Mortgage broking is becoming overrun with the same sort of nonsensical compliance bureaucracy that has infested financial planning. A lot of people have suggested the current credit squeeze is just lenders following the rules they should have been following all along. That’s only part of the story. Much of the credit squeeze is due to insane and unnecessary bureaucracy that has nothing to do with responsible lending laws.