Addressing the FSC Future of Advice Summit on Tuesday, ASIC commissioner Danielle Press said the low level of take-up of early super SOA relief had been a wake-up call to the regulator that the advice industry was too hamstrung with layers of regulation to easily provide simple advice to those who needed it, even in emergency situations.
“We as a regulator tried to move quickly and give the industry what they asked for, and what we found was it didn’t seem to help,” Ms Press said.
“It’s exposed for me a challenge to say what is it we need to do and how do we address some of these issues differently. COVID has created an insight into what we can do as a regulator and whether there’s something more we need to do.”
The regulatory relief, provided in mid-April, saw ASIC eliminate the need to provide an SOA for advice around early access to super for financial planners, tax agents and in-house super fund advisers.
The measures were only available for advice where fees were capped at $300, the client had approached the adviser for advice and the advice provider had established the client was eligible for early release.
The Advisers Association chief executive Neil Macdonald said the relief measures had unfairly advantaged intra-fund advisers, as opposed to retail financial planners who were still subject to strict obligations even without the need for an SOA.
“The measures include a temporary no-action position for super trustees to expand the scope of personal advice that may be provided by, or on behalf of, the trustee as intra-fund advice,” Mr Macdonald said.
“However, financial advisers must still meet best interests duty and safe harbour obligations for new clients. If a client wants to see their financial adviser for intra-fund advice, the adviser should be subject to the same rules and disclosure requirements as those providing intra-fund advice on behalf of super fund trustees.”
Ms Press said ASIC was keen to collaborate with the industry around the key pieces of regulatory relief that could be provided to make advice on simple topics easily obtainable for consumers.
“Out of this process [the industry] could come up what are the five things you need, what are the bite size things we need government to do here to move it forward,” she said.
“If you can get some alignment on that and clarity on what the industry needs, there is a supportive regulator and government is supportive of those things if they can see the right model. Senator [Jane] Hume is also open to having conversations around what the future looks like.”
No one (clients or Advisers) WANT a Statement of Advice. No one (clients) WANTS a PDS. No one (clients or Advisers) WANT FDSes. No one (clients or Advisers) WANT Opt-Ins. No one (clients) WANT Fact Finds or Risk Profile questionnaires. WAKE UP ASIC and POLITICIANS. The only one wanting any of these ridiculous things is ASIC so that it can keep its people in a job and position of power.
You don’t think clients want safeguards?
1 – Apply a best interest duty to every person / product / robot that facilitates the acquisition of a financial product
2 – Abolish AFSL
3 – Remove the need to provide a statement of advice. Clients do not want to read them or pay for them to be prepared.
4 – Allow clients to scope advice and sign a waiver so that we can provide the actual advice the client wants and they can decide to disregard the warnings and limitations we identify and own the consequences. Not advisers.
5 – Make it law that any regulated super fund has to allow a fee to be paid to any ASIC licensed adviser and allow fees to be drawn from super for non super advice, and make advice tax deductible.
Five things we need the government to do:
1) Abolish AFSLs
2) Ban vertical integration (all of it – the big retail boondoggle, industry funds, MDAs, all of it. Product should not own advice.)
3) Get the SDB right (see Dante De Gori’s comments in another piece)
4) No more TPB (while they’re perhaps the most reasonable of our many, many regulators, they’re also the least relevant.)
5) Make everybody in ASIC actually read the FASEA code. Their demonstrations of ignorance about it are becoming embarrassing.
Now, while you’re at it government, I have this $118k accounting bill I need to speak with someone about.
An utterly corrupt and incompetent regulator that should be disbanded.
$300 dollars, well let me be generous and say; that might cover the cost of sitting down and providing an FSG and then explaining what we do and what we can’t do, and maybe contacting the superfund for the forms. Who pays for the rest of our time dealing with the provider and trustee??
Thank you for being honest. At the end of the day, we can desire to help others and be charitable, but if we cannot recover enough fees to maintain costs and provide for our existence, we will not remain in business for long. The only way in which it would be feasible to make financial advice accessible to all Australians would be to make it similar to the way medical GP’s operate bulk-billed practices. A high volume model which would be subsidsed via a medicare style system would be the only way in which every australian could access financial advice. Yeah right, i hear the scoffers in the background, but wait a second. How much money does the Australian government spend on funding Centrelink offices and staff Australia-wide. Why couldn’t such services be facilitated via financial advisory firms as a bulk-billed option within private firms throughout Australia? The government would save the entire cost of funding client facing centrelink offices and staff, and that money could be used to fund the payment to finacial advice firms for the consultation. Think about it – clients would have a life-long relationship with a financial advice firm that could see them through their life stages – starting with applying for Austudy as a University Student, Learning to budget and save with their first job out of uni, applying for first home owners grant and arranging finance when purchasing their first home, etc, etc, right through to planning for retirement and succession planning. Such forward thinking would benefit the Australian economy greatly as a whole, as fewer people would be reliant on social security over the long-term and household wealth would increase. Anyone agree?
Is this the same regulator which a) told the Royal Commission the vast majority of consumers don’t need financial advice; b) has tried their damnedest to cut-off adviser revenue; and c) has caused the majority of our red-tape problems through ridiculous interpretations of the Corps & SIS Acts and by lobbying politicians and influencing past Government inquiries. So now we are supposed to believe that ASIC has suddenly changed and they want to help us? Yeah right. Hey look, there goes a unicorn!
Everyone has gone mad. The system is broken!
It actually comes from a fundamental misunderstand of what is advice. It seems ASIC thought that advice was easy and could therefore be done cheaply if compliance is reduced. Our response showed that advice is not easy and there is a big benefit in knowing the client on an ongoing basis. Back to the drawing board.
It really does seem that way, doesn’t it? It’s been interesting seeing them start to realise the complete disconnect between their theory and our reality.
I really hope that we’re able to get the message through now before our moment passes – if not now, then we’re doomed.