In responses to questions on notice from the House economics committee, ASIC said the consultation paper, which was previously flagged by ASIC commissioner Danielle Press at the FSC’s Future of Advice Summit, would form part of its broader project on unmet advice needs and be released in the final quarter of 2020.
“Our first public output for the unmet advice needs project is a consultation paper, which seeks to gather information from industry participants (licensees and individual advisers) to help us understand what impediments [or] issues exist in relation to them providing limited and affordable personal advice to consumers,” the regulator said.
“Our focus is on what practical steps ASIC or industry could take to promote limited and affordable advice.”
ASIC said its unmet advice needs project was “specifically seeking to address the concern that consumers may find it difficult to access affordable personal advice”.
“Through previous consumer research ASIC has undertaken, we know that consumers want access to ‘limited’ (‘single-issue’) and affordable personal advice,” the regulator said.
ASIC said while the legislative settings around the sector were the responsibility of government, the regulator was focused on “whether it can assist industry [to] overcome some of the barriers it faces in providing good quality ‘limited’ and affordable personal advice through actions within its regulatory purview”.
“For example, we are currently exploring matters such as whether further guidance or guidance in a different form would help industry,” ASIC stated.
The regulator added that as part of the unmet advice needs project, it was also undertaking research to ascertain “the true cost of providing advice”.
The following will remove 50% of the problem and lower the cost. Opt-ins should be opt-outs, Remove FDS’s. No ROA for intra-fund advice, remove everything associated with TPB and associated requirements, ASIC to provide 8 page proforma SOA’s. I could drill down further but I do not want to bore you. This industry is a mess.
My 4 year old daughter was in hospital last week and required surgery. Given her age there were serious risks with it. The paediatrician talked us through it for 10 minutes and then had us sign a one page standard waiver. Off they went and thankfully everything went ok.
I went back to work and my client had $50k spread over 3 super funds. I wanted to say “just roll these two into this one”, but instead I had to make sure they had read through my FSG, do a fact find to understand their bigger picture situation and risk profile, write a 20 page SOA, get the client back in again to run through the risks with it, make sure they read the PDS, and then implement it for them.
Unfortunately the red tape that we must go through ads many hours to our work. What I should have been able to do in 1-2 hours takes 10-15 hours. This is what should be fixed.
Well said. I often wonder what some people mean when they say this is all necessary for Financial Planning to become a profession. I have medical professional in my family and they are just amazed at our situation – but then again, they understand that there is BIG MONEY in Superannuation and the product Manufacturers (mainly Industry Super) seem to be winning FUM from this legislative strategy.
The only way to increase advice to low income earners is to remove Opt-ins. Until that happens, millions of fund members will be dumped by their advisers, as Opt-in is designed for filthy rich elite advisers only.
I’m no fan of ASIC or the current regulatory tangle, but I’ve been reading some of their RGs lately. And the difference between they say in these guides and how licensees interpret things is striking.
Like, alarmingly so.
I’ve not had to deal with them, so I’m sure it’s not quite as positive as it might seem from the outside. But I have to say I’d rather operate solely under the RGs than have to deal with the extra layer of dicey licensee ‘guidance’ (which differs from AFSL to AFSL).
They’re far from ideal as a regulator, but don’t forget the duplicative role of the licensees in this whole mess.
That’s true, but what about the difference between what RGs say, and the persecutory approach taken by ASIC & AFCA when it comes to enforcement. I think you will find the extra layer added by licensees is to protect themselves and their advisers from regulator persecution.
Here here. The old adage of follow the money comes to mind. It is in the interest of the compliance teams to make it as complex as possible, otherwise there is no need for them.
Scaled advice works well for Call Centre Advice. StatePlus,/AwareSuper’s of the world. They have an endless pipeline of hundreds of clients and it’s easier for them to chop up the work into pieces. A chop shop, get them in get them out approach. I’ve seen it before with time poor accountants….you start the pension, then 12 months later you cash out and re contribute,, then a year later you handle the death benefit nominations….you’ve spread the work load over time and charge them at every step as opposed to doing a proper job for less money at the start..
That’s scary you think it should all be provided in one sitting…
This project needs independent oversight. The primary cause of high costs and excessive red-tape stems from ASIC themselves. Not only because of their bizarre, retrospective, draconian interpretations of the Corps Act. But also their influence and lobbying of the Royal Commission, Rippoll Inquiry etc. etc. which has put their bias against financial advisers on show for all to see. They are already pointing the finger at Government and Licensees before the consultation starts and this notion that consumers only want or need simple, low cost, one-off advice is wide of the mark given the bulk of financial advisers have clients who happily pay ongoing fees to have a long-term relationship with a financial planner.
Too little, too late. The horse has bolted and the Industry is a mess. We are yet to see most of the RC recommendations implemented, we are yet to have FASEA tested in the courts or during complaints and the adviser exodus out the door is being slowed down by the exam extension and advisers waiting for market conditions improving so they can actually sell their business. All the while, advisers cannot deliver simple advice & consumers don’t know where to go to for affordable advice.
This consultation paper will be another typical 100 page regulatory guide written by bureaucrats that at best tweaks the edges. It may be 2 to 3 years before even small progress is made and by then the damage will be irreversible.
I am sure that one day their will be a case study on ASIC and the damage they caused not only to the advice industry but to the Australian economy. Simple advice, delivered at low cost can have a significant impact to Australians and indirectly to our economy. This case study will show what we all already know and that is that ASIC is a large, broken government agency where public servants spend their day ticking boxes & totally oblivious to what is happening in the industry these people are being paid to serve.
If ASIC is the problem then politicians are to blame. The PM must immediately intervene and appoint a senior minister to sort this out. Jane Hume is a lightweight trying to fix a complex problem. They have thrown billions of dollars at this agency and all we have is another report into unmet advice needs. To both the Liberal & the Labour party, we are not merely 20,000 advisers that have no political influence but we are hundreds of thousands of advisers, staff, spouses, children and clients and soon to be millions of Australians that are going to ask why cant they get and or afford advice! It is time to wake up and actually give a stuff.
They are putting the cart before the horse. Have to scrap Farsea before any headway can be made with scaled advice or advisers will remain ope to litigation.
Interested to see how they will be able to meet best interest duty in regards to understanding the clients goals and objectives, identifying intrinsically linked subject matter that should be bought to the clients attention providing warnings to the clients in regards to leaving out subject matter, deciding if declining to provide the advice is prudent due to lack of information and ability to collect relevant information. I know as an adviser these are the guide lines i have to adhere to. The issue is these guys are not advising they are retaining FUM, they are a salesforce, therefore stop calling them advisers it is confusing to the public, they are product specialist and this is what they should be called, not advisers. Which also presents the big question should industry super funds then be entitled to charge for advice if it is NOT actually advice based on the corporations act the rest of follow. That is the real issue these guys are not wanting to give up an income stream.
It makes little difference whether the SoA is 10 pages or 80 pages. It’s all the other regulatory, product provider and licensee loopholes. It’s dealing with industry super funds, that want to block you at every turn, it’s the AML,SOA,ROA’s, the privacy laws, delivering advice suitable to defend against AFAC, meeting PI cover requirements the opt in the FDS, the invoicing, the letters of engagements.
The best way ASIC could promote affordable advice is to stop persecuting financial advisers. Everyone knows scaled advice is legally allowable, and SoAs aren’t required to be 80 pages long. But advisers are forced into covering more issues, and writing more disclosure, to protect themselves from ASIC. ASIC goes looking for the slightest administrative oversight, and makes the most draconian interpretations of ambiguous laws, to deliberately persecute advisers. They want all financial advice to be given by accountants or union funds, and see it as their mission to destroy licensed financial advisers.
It’s time to remove ASIC from financial adviser regulation altogether, and hand their enforcement role over to a less biased agency. Perhaps the new Single Disciplinary Body?
ASIC has no credibility any more!
Did Shipton and Crennan receive full or limited and scaled advice ?
Can’t wait for another ASIC stitch up of Real Adviser and the Regulatory Capture and promotion of Industry Super.
Bet anyone as much as they like the ASIC findings will be:
1) Industry Funds can expand Hidden Commissions to pay for more Intra Fund Sales / Advice to cover any area of Advice they want. Zero BID, ZERO FARSEA Compliance, to keep costs down.
2) Industry Funds can expand Call Centre Jockeys paid for by Admin Fees by All members to pay for more General Information Sales / Advice. And of course these Call Centre jockeys are non Advisers, non educated, no AFSL’s, no BID and no FARSEA compliance. Just a free for all to get away with as much Industry Fund sales as possible.
3) Real World Advisers – still have to meet every layer of ASIC BS REGS, AFSL, BID, FARSEA, LIF and Every form of Compliance possible, because we the ASIC hate Real World Adviser and competition to Industry Super.
Report Complete – signed your Friendly ASIC Corruption Body.
This should be good! Especially interested to see how the “scaled advice” satisfies all the requirements of the FASEA Code.
Well – I cannot wait for all of this. It is so painful. This” newly found” set of problems – advice gap/advice cost was totally predictable so long ago. It will also depend on licensees allowing advisers to give limited advice. Going by the 60 page SOA’s my licensee currently demands, I cannot see it happening. The horse has bolted on all of this. It’s now too late !
I wonder what research ASIC is taking to ascertain the true cost of advice -like rent, insurances , staff wages, computers, telephones, desks printers , advertising, professional hours etc etc etc-not things that public servants really have to manage.
Industry Funds Advisers have next to zero costs, as it is all Cross Subsidised by Intra Fund Hidden Commissions : – /
add an increase to PI of 30% to that, along with asic levy, TPB etc etc
This will be interesting. Will the SoA be FASEA compliant, for example (but not limited to) taking into account the impact of the advice not only on the client, but the client’s family?