The Australian Law Reform Commission (ALRC) has released its latest background paper for the financial services legislation inquiry – Reflecting on Reforms – Submissions to Interim Report A (FSL6) – in which a number of stakeholders expressed support for “recasting the safe harbour provisions as indicative behaviours of compliance”.
In its submission to the ALRC, the Association of Financial Advisers (AFA) wrote that the safe harbour provisions have “become a very prescriptive tightly applied obligation that has unfortunately added significantly to the complexity and cost of providing financial advice”.
Similarly, Professor Elise Bant of the University of Western Australia said the current provisions “promote formalistic and legalistic approaches to ‘compliance’… nicely labelled as a ‘tick a box’ mentality”.
The SMSF Association has also backed the recasting on the basis that it would allow advisers and licensees to use their “ethical and professional judgement”.
The ALRC noted that a number of stakeholders called for the proposed reform to be considered as part of, or after, the finalisation of the Quality of Advice Review in December.
The ALRC’s paper comes after the government agreed to simplify and clarify the safe harbour provisions in March.
The government ticked off all 14 recommendations in the final review of the insolvent trading scheme, vowing to work towards a “plain English best practice guide” that sets out general eligibility criteria for appropriately qualified advisers.
The government agreed that a best practice guide should be development in consultation with key industry bodies and handed down by the Australian Securities and Investments Commission (ASIC).
The fundamental issue with any legislation is how it will be enforced. Unfortunately the regulators enforcing financial advice legislation are biased and vindictive. They deliberately go looking for loopholes and minor technicalities in order to persecute innocent advisers, based on regulators’ personal ideologies and/or a desire for indiscriminate revenge for the wrongdoings of a minority of dodgy advisers in the past.
This is why financial advice compliance is so over the top. It is driven by a need for protection against bad regulators.
In trying to make professional advice more accessible and affordable to consumers, simplification of legislation and regulatory structures is certainly welcome. But the issue of biased, vindictive, regulators must also be addressed.
Our profession is being ruined by lawyers who complicate matters so they can suck off our dying corpse. Financial Advice should be pulled from the Corporations Act altogether. We have a comprehensive Code of Ethics which is enforceable. Why double up with the same activities in the Corps Act? Why was the CoE even created if all of the legislation was to remain in place? This is so far beyond what any other profession has to put up with, it’s not funny. The only winners are the legal vultures