ASIC has provided regulatory relief to Victorian advisers after extensive lobbying from the AFA.
ASIC has announced a “no-action” position for FDS and opt-in obligations for advice businesses solely or substantially located in Victoria. ASIC will take no action against a Victorian adviser who has missed an FDS deadline for a pre-FoFA client between 2 August 2020 and 26 October 2020, provided they issue an FDS by 7 December.
While ASIC will take a no action position for post-FoFA clients where the FDS or opt-in obligations are not met between 2 August and 26 October, it does not change the fact that the ongoing fee arrangement will be terminated and that the adviser will need to notify the client and recommence the arrangement.
“We are pleased with this announcement as we have been working closely with ASIC, the government, the FSC and the FPA to find a solution for what we expect will be a growing issue with non-compliance with the FDS and opt-in obligations during lockdown in Melbourne and more broadly in Victoria,” the Association of Financial Advisers (AFA) said.
“With advisers and their staff working from home in some cases, or being unable to work due to system issues or childcare responsibilities, it would not be surprising that a number of advisers have missed the FDS and opt-in deadlines for some of their clients.”
The AFA warned that any adviser facing this situation will need to “carefully analyse” the exposure they have and prioritise the work that needs to be done to recover the situation.
Some key considerations include prioritising post-FoFA clients due to the potential termination of the ongoing fee arrangement, potentially recommencing the arrangement through the issue of an engagement letter with an electronic agreement from the client, and addressing pre-FoFA clients once post-FoFA client issues have been resolved.
“In this instance, ASIC have done everything that they can within the limits of the law to find a solution for Victorian based financial advisers impacted by FDS/opt-in non-compliance due to the COVID-19 lockdown,” the AFA said.
“Broader relief measures are in the hands of the government and we have communicated with them to explain the difficulties confronting financial advisers and to suggest potential solutions.”
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