Speaking at the Stockbrokers and Financial Advisers Association (SAFAA) Virtual Conference, ASIC commissioner Cathie Armour said she had found concerns about the shortened internal dispute resolution response time frame “puzzling” and she was “struggling a little bit with that one”.
Licensees will need to provide a response to client complaints in 30 days, from the previous limit of 45 days, as per ASIC’s guide issued in July. The requirement will come into effect from 5 October next year.
SAFAA chief executive Judith Fox noted the change could lead to matters not being resolved in time and ASIC identifying licensees as high risk, justifying fee increases as regulatory costs are already rising.
But Ms Armour rejected the concern, saying the previous 45-day standard had been in place for 20 years.
“So in 20 years, the technology changes that this industry had dealt with, that have been a massive investment, that have allowed it to be rigorous and agile enough for example, to on mass start working from home from the drop of a hat,” she said.
“It really seems to me that it is something that people are capable of adjusting to on that reduced time frame. And I’d be very surprised if this industry, which is so well organised when it comes to using technology, isn’t able to make that adjustment.”
She added the change will come in a year and there are two exceptions allowing longer time frames, when the matter is complex and when the matter entails something that is beyond the licensee’s control.
Ms Fox also asked Ms Armour if there was a conflict between making advice affordable against a requirement from licensees to ensure compliance, referring to comments on statements of advice from Assistant Minister for Superannuation, Financial Services and Fintech Jane Hume.
Ms Hume has flagged the possibility of the government extending SOA relief for scaled advice during a July webinar, commenting she had heard about advisers completing 80-page SOAs, which she called “crazy stuff”.
“I’m not sure if there’s a conflict or just a gigantic misunderstanding. We would say an 80-page SOA is a real problem as well,” Ms Armour said.
“We’re looking for communications with clients that are clear, concise and effective and how on earth an 80-page SOA meets that requirement is a real concern from our perspective. And I think perhaps … there’s a perception that one needs to produce lengthy documents to manage some other risk, that’s not the risk that we’re concerned about.
“What we’re concerned about is providing good financial advice that meets the legal obligations, and there is not an obligation to have a lengthy statement of advice.”
Ms Armour also invited SAFAA members to send examples of where ASIC had said that advisers need to write lengthy SOAs.
The regulator overlooks past SOAs in its effort to monitor the quality of advice and systems operating in licensees.
“We don’t see that as a conflict,” Ms Armour said.
“We’re very interested to hear about more effective ways that we could test whether good advice is being given, but at the moment, one of the tools available for us is just to go and test by looking at what’s happened in the past.”
The regulator has been undertaking a project looking at unmet advice needs, with the commissioner adding it is interested in ideas and feedback from the sector.
“We’re interested in exploring things like, is there something that we can do to encourage situations where a more scalable advice could be provided, for example?” Ms Armour said.
“The framework is largely a legislative framework, we’re interested in seeing what we can do within that.”
yes the part of the SOA to meets ASIC requirements are only about 40 pages, then there’s another 20 pages so that you don’t run fowl of the complaints body (AFCA) and another 40 pages to protect us from legal firms, and then there’s another 5 pages to explain to the client what the actual strategy is because all though other pages just confused the client even more.
I really, really hope that ASIC aren’t going to sheet the blame for these unwieldy advice documents to advisers. I mean, every other damned thing in this game has been put on us, so I suppose they will, but I really hope this is the one that gets them properly looking at the role of AFSLs.
Our system makes no sense at all.
We have laws and we have regulations – good.
We have guidance from the regulator which (if you can read it without assuming the worst from the regulator) is actually pretty clear and useful.
Then we have 2,000 AFSLs – each with their own teams of salaried ‘managers’ – all interpreting the rules their own special little way. Like having 2,000 soccer matches running with each umpire using slightly different rules.
It’s bloody madness.
The only solution to this is individual registration. I know I’m harping on about this, but it’s the [u]only [/u][u][/u]solution.
Eliminate that tier of duplicated compliance and you:
– Have one set of rules for all 20,000 advisers to abide by (or however many of us make it through this storm)
– Have one body responsible for guidance, compliance and punishment
– Strip however-many-millions of unnecessary expense – that’s how you make advice ‘affordable’.
Hang on, we have 9 different regulatory bodies that ALL have Put out different rules and Regs to follow.
How freaking stupid is that ??
– And we have the main Regulator ASIC that is ridiculously paternalistic and believes more REGS at every option is the only solution.
– Then we have the Kangaroo Court of AFCA that is worse than ASIC in its paternalistic rulings that mean a client / consumer should never lose a cent if they Ever want to complain.
– So before you blame the AFSLs that are highly confused from 9 different regulators with 9 different sets of rules.
Let’s call this REGULATION CESSPIT FOR WHAT IT IS AND WHAT GOVERNMENTS AND BUREAUCRATS have created.
It freaking stinks !!!!!!
Completely agree – other than the fact that it will be 10,000 advisers by 31 December 2021.
It’s the licensees fault for making SOAs so long I challenged compliance to show me anything in the corporations act or RGs to say that I needed to add all this extra crap in my SOA that they wanted their response was that was their requirements.
Well that is the exact reason I have my own licence and create SOAs that if fully comprehensive would be a maximum of 20-30 pages long cut out all the BS stuff licensees want to cover their own ass when they don’t release the AFCA will actually say clients don’t understand the advice of SOAs are too long because it’s not clear concise and effective.
If your licensee is making you write long SOAs challenge them to show you the exact legislation or RG that requires you to do that they won’t be able to.
Licensees add to the many other problems we have
I’d suggest licensees are at the core of most of the many problems we have.
I suggest the legislators, then ASIC are at the core of most of the many problems we have. When ASIC lawyers get onto you good luck with your bush lawyer skills.
ASIC get to pick and choose which complaints they respond to. They don’t investigate most of them. Maybe that is why they think this is such an easy process?
Part of the reason for lengthy SoAs is ASIC’s “guilty until proven innocent” approach to financial advisers. Advisers are just trying to protect themselves against ASIC bias and persecution.
Is this really the quality of administrator we have to deal with in our profession going forward!
ASIC is still in telling mode and not in listening mode. Being a regulator is more than being an enforcer.
Maybe if ASIC put out model SOA’s for a range of circumstances that would clear it up for us…….
Ha-ha , clearly ASIC has no idea – Standard 6 of FARSA effectively eliminates scaled advice.
Yep that’s why we need various SoA templates that form Govt / ASIC / AFCA clear guidance and a foundation of security to Advisers
ASIC truly live on another planet in their Canberra bubble.
It’s NEVER ASIC’s fault for BS REGS that massively increase the costs of Advice and have been ever increasing for 20 years.
[b]REGS = ASIC’s overly paternalistic explanations of how ASIC interprets the law. [/b][b][/b]
ASIC stop blaming everyone else, grow up and take some responsibility for the crazy over regulation.
[b]ASIC – give us multiple SoA templates that are ASIC approved, Corporations Act approved, AFCA approved, FARSEA approved, TPB approved, Common Law approved, ACCC approved, plus meet ALL ASIC REGS and PI approved. [/b][b][/b]
They did one for TTR pensions back when they first came out… it was 8 pages long …
Their insurance sample SoA had the commission on the first page. So much for putting clients’ needs first.
Is it FARSEA compliant ?
FOFA compliant ?
Best interest Duty compliant ?
AFCA compliant ?
MS Hume, clearly has no idea about the past of SoA’s. Has she even looked at the SoA examples released around FOFA by ASIC themselves which later proved to be non-compliant with ASIC’s own rules. Is she not aware that SoA’s apart from fuflling the Corps Act requirements which ASIC oversea’s now must also meet FASEA requirements and also provide legal protection fro both the adviser and dealer group?
I just can’t help but think that the clear lack of understanding of why things are the way they are is a huge failing of any policy makers.
FOFA has failed in it’s objectives and I can tell you that isn’t because of advisers but ASIC. Continuing to increase the compliance regime only adds to the cost, which through it’s very nature removes access of affordable financial advice from the masses, and many in those masses could benefit greatly from that advice.
We are now looking at the next round of failed policy in FASEA. Which again won’t improve advice or outcomes, merely add another cost barrier for all Australians.
Just to be clear I’m not against reform. I thought FSRA actually had merit and helped once worked through. Since then though, it’s been a story of failed policy and I say failed because it ultimately keeps proving to do the opposite of it’s stated objectives.
I just wrote an 80 page SOA on debt, cash flow, super, investments and risk and THE LAW says I have to include details that THE CLIENT would not care to read. The LAW is what makes SOA’s UNclear, UNconcise and INeffective. No one is writing 80 page SOA’s because they want to Cathie.
30 days is fine. Will ASIC apply the same rule for Licencees when Advisers have a complaint against the Licencee ?
Possibly. The issue of timing is normally to do with the human resource of the equation, not the technology. Again cost becomes a limiting factor, as everyone involved in the complaint process, actually has another job to do. Unless we think a dealer group/licensee should be paying people to sit ideal just to deal with complaints if they do come in.
i.e. Complaint is made, the adviser then informs the dealer group of the complaint. Dealer group responds to adviser and asks them to send through all the info about the complaint. This can take several days to put together. Dealer group then needs to free someone up to have a look at this complaint and make further inquiries (5 days to allocate to someone seems fair). These inquiries generally involve going back to the adviser for more info or clarification (another 5 days).
Then depending on the complexity of the complaint this may need to be referred to legal. Another five days, then request for some additional info or clarification which adds a few more days. Then decision needs to be reached and complaint letter complied for client of outcome. Lets not discount the weekend days in this process which adds another 6 to 8 days also, or a public holiday or two depending on time of the year.
This can easily take 30 days, as there a re multiple parties involved that reasonableness should expect aren’t sitting by their phones only waiting for this complaint to come through for resolution.
So sure, 30 days would be best practice, but it’s not odd some would think this is more of a hassle and cost add than achieving anything really substantial.
So my real question is, which all the real problems with the legislation, why is this the one ASIC or Ms Hume feels is what needs adjustment to make the industry better?
ASIC have created the issue around 80 page SOA’s because they refuse to provide clear and concise guidelines to licencees on what they want. Without this licencees use lawyers to write the SOA to cover their backsides which results in a legal document that has no client focus.
ASIC tried to produce a SOA years ago using their guidelines and it was quite easily torn to pieces. Since then they have simply given up, instead of giving real direction and fixing the problem. ASIC is lazy and incompetent, and is more interested in increasing levy’s and compliance on advisers who provide real advice and pushing people to get “general advice” from their union fund mates.
The SOA’s are 80 pages long so as to protect the licensee from bottom feeding lawyers. It is ultimately the licensee who dictates what goes into an SoA. These days a stock standard risk SOA is at least 50 pages long. Insane when you think about it.
My last SOA was 139 pages and 39,575 words in length. Who’s doing 80 page SoA’s these days?
My 75 Page SoA for a downsizer contribution must be clear concise and effective then! We were screaming about this ludicrous content 10 years ago and it keeps getting worse. What a debacle.
Lol. You win!