In a new policy paper titled Creating a fairer compliance regime, the AIOFP said it was “time for regulators such as ASIC, AFCA and FASEA to move away from the policy paradigm of not giving practical direction to advisers on compliance matters”, which was increasing the cost of compliance for licensees and making advice increasingly unaffordable for the middle class.
“This culture has increased the uncertainty amongst the adviser community and driven some parties to install a superfluous compliance bureaucracy where the cost is being passed back to consumers,” the association said.
“Advisers are at the coal face dealing with consumers and are highly respected by them; these people become family and the last thing advisers want is having to cut them off due to compliance costs.”
The paper pointed to scaled advice as a good example of a grey area that many practitioners and licensees were wary of operating in, given the lack of clarity from regulators around how it could safely be provided from a compliance perspective.
“While advisers are told that on one hand scaled advice is an acceptable form for advice provision, assessments made by regulators regularly posit that additional material and disclosure is required, seemingly negating the acceptance of the use of scaled advice,” the association said.
“Can the situation be dealt with utilising a ROA or a short letter outlining the advice position, or is a SOA called for? If a SOA is called for, to what extent can the advice be scaled, or is a full situational advice SOA required?”
The association also called attention to contradictions in guidance around the SOA, which was estimated to take advisers around 10 hours to produce.
“Sections 947B (6) and 947C (6) of The [Corporations] Act state that ‘the statements and information included in the statement of advice must be worded and presented in a clear, concise and effective manner’,” the paper pointed out.
“That this statement is made identically in each of the two sections of the act noted above, it would suggest that this is an important point to adhere to when writing advice documents, and for regulators to consider when documentation is presented to them.
“Experience though is that regulatory scrutiny, even of long and complex documents, consistently finds that additional materials should have been included.”
The association said it planned to present the paper in front of a roundtable of MPs in Canberra in October.
On Senator Jane Hume’s website it reads the following:
” In 20 years, when I look my children in the eye, I want to reassure them that my generation, and I personally, have done all that we can to create a productive and prosperous Australia in which they have every opportunity to thrive and fly”.
One can only imagine Senator Hume is not expecting any of her children to carve out a productive and prosperous career in financial services unless the train wreck of what currently exists is turned around very quickly and common sense prevails regarding the conflicting and overly complex regulatory regime that is kicking this profession into the gutter.
The level of regulatory over reach and persistent attack on this industry is destroying the fabric of business and is literally destroying the mental and psychological fabric of so many who are imminently dedicated to the financial well being and care for their clients.
If Senator Jane Hume wants to make her mark and leave a mark, then the place to start would be to demand the current situation and trajectory is halted and a common sense approach is invoked before it is too late.
Good. Someone needs to put a stop to crap guidance like this rubbish: https://www.asic.gov.au/for-finance-professionals/afs-licensees/applying-for-and-managing-an-afs-licence/limited-financial-services/afs-licensing-requirements-for-accountants-who-provide-smsf-services/
Either the law is nonsense or the people who issue guidance are incompetent. Which?
If the regulators gave me a checklist of exactly what I need to do to create compliant advice, I’d do it every time.
They have given you a list, they have given you 9 different lists from 9 different Regulators.
And lucky us the 9 lists are all overlapping but different.
Thus no one including the Govt has any idea what list(s) to really follow.
Clusterf##k central : – )
I applaud the effort, but I think you’ll find at least some of the confusion around scaled advice and lengthy SoAs stems from licensee interpretations of the law.
It can be quite eye-opening reading ASIC’s Regulatory Guides and the Corps Act alongside some guidance coming from licensees.
Sure, I know ASIC’s conduct and discussions with licensees can stray from the black-and-white letter of the guides and the law. And they’re far, far from a model regulator.
But, still, the troublesome role licensees play in this swamp of confusion needs to be forensically assessed as well.
How about AFCA and the new FARSEA’s interpretations.
I can guarantee any adviser will lose every case against AFCA + FARSEA combined.
It is simply so open ended and impossible to practically not leave yourself open to an AFCA claim.
Why is the AIOFP kicking so so many goals at the moment for advisers. FASEA extension…tick… starting to get ASIC to think about costs to the consumer…tick…..Good job AIOFP….it’s amazing what can happen when you’re not the puppet of a large product manufacturer. Imagine what could happen if more members left the FPA. Advice could be affordable and we’d not be the kicking post for everyone. I guess it’s now up to FPA Members. You either become a Professional or you keep holding us back.
Good comment. Not sure hit the thumbs down by Dante and Ben Marshan come to mind.
[b]Because the AIOFP is for Advisers. [/b][b][/b]
Unlike the FPA that is for themselves and institutions and always has been.
I can proudly say in 23 years advising I’ve never been an FPA member and never will be.
It’s very simple The AIOFP is the ONLY organisation that represents non-aligned advisers, whereas all the other advocacy groups represent institutional interests. Wakey wakey – your businesses are being killed off by these other groups (who are taking your membership money under false pretences).
10 hours for a SOA ? That was the old days. Many more now.
Planners want to do the right thing but we and our compliance people don’t even know what that is anymore thanks to the multi level conflicting and vague regulation. Do your f’ing job regulators by giving us clear practical guidelines and grandfather this unnecessary re-schooling crap so we can service our clients without a knife in our backs.
Or perhaps take it one step further, given that the regulators are “apparently” the oracles of all things financial, just get ASIC to establish a fully compliant Medicare style government funded Financial Advice department staffed by degree qualified non-conflicted PAYG government employed advisers. They can then administer their rules and regulations with 1941 German Wehrmacht efficacy for the whole nation and kill off all private enterprise. I am just soooooo over it.
The Government Pollies, Regulators and Bureaucrats are as useless as
[b]Dennis Denuto: In summing up, it’s the constitution, it’s Mabo, it’s justice, it’s law, it’s the vibe, and… no that’s it…it’s the vibe. I rest my case.
[/b][b][/b]
What an absolute sad joke has Advice become from these clowns in Canberra
Keep up the good work AIOFP
The root of the problem is that regulators are more focused on persecuting advisers than protecting consumers. No matter how big a disclosure document is, regulators will just keep looking for something that’s not there, which they can use as “evidence” of insufficient disclosure.
the silence is deafening, so true
Well done to the AOIFP for calling this out. I hope the politicians take notice. We are finally getting to the root cause of many of our problems – ASIC.
IMO the root cause of the problem is many advisers are still tied to product manufacturers. The solution is for all advisers to be self licensed (or under the AFSL of a non-aligned firm); no APL (which is just a way of firms making sure the advisers sell their products); 1 page SOA’s saying what the new investments should be that can be generated on the spot. This would allow adviser to work more like other professionals where clients come and see us with a problem and we help them.
Good work AIOFP.
is this the same organisation that wanted to keep trail commissions?
Actually the same organisation that wanted to defend the legal right adviser had been given to keep trail commissions.
Agree times need to change, they should have never been left out of FOFA.
As for Trail Commissions, i guess you think that Industry Super charging every member a Hidden Commission to pay for Intra Fund Advice that very few members use is OK ? Talk about Trail Commissions / Fees for No Service.
It was more about the principle. That being the Government stepping in and ceasing private contractual agreements between two parties. It was all about sending a message to Government that Advisers had enough of being the kicked and blamed by everyone for the sins of large Bank owned licensee’s. It was aimed at sending a message we can bite back. I don’t support trail commission and I am meet ASIC definition of indepandant but I supported that move.