As of this week, life insurers, fund managers and financial advisers have several new reforms to abide by, including new rules for individual disability income insurance; new reference checking and information-sharing guidelines; new breach reporting requirements; new “duty to take reasonable care not to make a misrepresentation” instructions; anti-hawking reforms; deferred sales for add-on insurance; and internal dispute resolution.
Slated to improve consumer and business outcomes, the new changes are being described as the most significant and wide-ranging set of reforms, ever, for a sector already laden with layers of red tape.
As of last Friday, financial services licensees are required to report any breaches they discover, including their own, even if the breach occurred before 1 October, with data said to be made public from late next year.
And while all are considered disruptive in their own regard, none more so than the new breach reporting requirements, the design and distribution obligations (DDO) are among the most onerous.
In a bid to stall their introduction, the Association of Independently Owned Financial Professionals (AIOFP) launched a petition last week asking the government to press pause on DDO until mid-next year.
“The latest consent forms and DDO legislation have been introduced during the worst of COVID where implementation confusion is widespread among product providers, regulators, advisers, and expensive for consumers. This has been well documented in recent times,” the AIOFP’s petition justification reads.
And while the Financial Services Council (FSC) hasn’t been as forward in its messaging, it did refer to DDO as a “red tape burden” in a statement inked on Friday.
“The red tape burden from this raft of reforms is significant and can add to the cost of delivering products and services,” the FSC CEO, Sally Loane, said.
But, unlike the AIOFP, the FSC praised the DDO’s ability to improve consumer outcomes.
“The FSC recognised the significance of the DDO changes early, given we have members across many affected sectors,” Ms Loane said.
“We are confident that the FSC, working closely with our members, has done as much as we can to help businesses transition to the new regime. We are also pleased ASIC has said it will take a ‘reasonable approach’ to the start of the regulations, which should assist businesses as they adapt.”
However, despite all preparation, October is expected to be a tough month for the already shrinking industry.
ASIC will send in their RTRU (Red Tape Reduction Unit) to the rescue…If only they could find him!!!
I can’t recall any other industry to fight much needed change as some elements of financial services. And sadly that’s not a compliment. The industry needed change and much improved regulation at EVERY level. Perhaps instead of criticising regulation change it may be better to work on weeding out the advisers and businesses that suffer, in no order, laziness, insufficient capital and business sense to move their businesses forward, questionable knowledge of regulation, always looking for the easy way out, reluctance to accept technological change.
There is nothing in any regulation that an adviser shouldn’t be doing anyway so why the complaints. Many advisers perhaps just don’t like the fact that after many years of easy work, minimal regulation and disproportionate high income they have standards that are being monitored. We have some outstandingly good businesses and advisers who have invested heavily in themselves and their businesses under the new regulated industry who are going to improve the perception of financial advice at the same time as growing their businesses. If any adviser or business who hasn’t invested in the ever improving time saving, reg / dealer group compliant, client advice and management tech platforms probably doesn’t deserve to remain in the industry. But I bet that there are a lot of advisers who see the upfront and on-going investment in technology as nothing more than reducing their take home pay instead of giving them more time, a more saleable business and increased net income.
With the intro of DDO, clearly Treasury and the rest of the brain dead boffins consider BID and FASEA Code not tight enough or Advisers not smart enough to recommend appropriate product. As usual, the FSC is peeing in the pocket of gov. looking for favours.
Why on earth would the FSC be supporting these changes which are undoubtedly costing their members many millions?
Because they’re not terribly bright or smart as evidenced by their decimation of their own new business figures…
This is the attitude that needs to change. All the new regulations, education, reporting is going to lead to increased income, more secure businesses and a better industry. If any adviser is losing money under the changes they seriously need to engage with their dealer group, for help and start talking to the tech providers.