Addressing the Stockbrokers and Financial Advisers Association 2021 Conference, ASIC commissioner Danielle Press said the regulator had received almost 500 submissions over the course of its consultation on promoting access to affordable advice.
“It was the most submissions ASIC has ever had to a consultation – we made it easy to put in a submission, but also with the interest in this space and the diverse views that are out there in the market, it was quite surprising the breadth of submissions we got,” Ms Press said.
She added that one of the key pieces of feedback was around the length and complexity of ASIC guidance, which the regulator would look to address through better testing and engagement with practitioners.
“What didn’t surprise us was that practitioners think our guidance is a bit difficult to understand, it’s a bit long, so one of the things we’re taking away from this is how do we make that more accessible,” Ms Press said.
“How do we talk to advisers as well as compliance people and licensees – we need to talk to both, and I don’t think we’ve done that as well as we could have.”
Ms Press said there was also a perception from the industry that scaled advice was in conflict with the FASEA code of ethics, something that needed to be better clarified between the two regulatory bodies.
“What we try to do is work through examples with FASEA that highlight and solidify the fact that scaled advice is okay. In Stephen [Glenfield]’s mind FASEA is saying scaled advice is fine, so let’s get examples to put out to get rid of the tension we’ve got between the two,” she said.
“It’s an artificial tension we need to get rid of, and the way we do that is work with FASEA to ensure the examples we put forward in regulatory guides are consistent with what FASEA is saying is compliant.”
She added that ASIC would also look to improve its guidance around SOAs, as well as opening up more circumstances where an ROA may be used in its place.
“I think there’s a bit of a myth that ASIC requires a 280 page SOA – we don’t and I think there are things we can do to make guidance clearer about shortening up SOAs,” Ms Press said.
“I’m encouraging industry participants to think about what is the SOA, how does it need to look, because it doesn’t need to be as long as people are saying it does by law. With respect to ROAs we are open to that conversation. The question becomes when can you use a ROA and when do you need to do a full fact find, and we’re thinking about what that can look like.
“An ROA has a strong role to play but I encourage you as an industry to think about how can we shorten the SOA, and we’re open to working with industry on that.”
None of what Ms Press has outlined here would do anything for affordability.
Say it takes 20 hours to prepare a piece of advice that you hope/think is compliant with the laws as they stand this week.
Halving the length of the SoA might save an hour. Using an RoA instead, maybe the same.
The work (and the expense) is in the lead up to the damned document – not the document itself.
It’s in researching three different alternatives for every recommendation, and in the delays sitting on hold to insurers/super funds/Centrelink.
It’s in the lengthy file notes, that have to be drafted in a way that accurately captures the conversation without digging our own grave.
It’s in the inconsistent application of the law by every single layer of the advice environment.
It’s in the extra work we have to do in case we end up in front of AFCA after they’ve spruiked up a case at Southern Cross train station.
It’s in the rocketing PI premiums we’ve copped because of the years – YEARS! – of mismanagement and regulatory stupidity we’ve had to endure.
It’s in those tidy little regulatory fees that keep coming in. $273 here, $3,471 there, before you know it you’re talking about real money…
And, finally, it’s in the insane fees we pay as an industry to licensees – an utterly redundant feature of our landscape that scoops money out of our pockets.
So you can keep your ‘shortened’ SoAs – until you resolve any/all of these issues, the price of advice won’t drop.
In fact, with the looming exodus of advisers, severe regulatory risk and explosion in demand, my fees are going up 1 July. By at least 20%.
And my SoAs aren’t even that damned long.
Well said but well above Danielle Press’s pay grade I’m afraid.
What a load of rubbish.
This is what technical incompetence devoid of pragmatism rising to the top looks like.
What short of bullshit strawman is a “280 page SoA”, how about 70 page SoAs being a problem, let’s just start with that.
After 500 submissions, her no.1 takeaway is that their RGs could be a bit clearer, what a disingenuous idiot.
ASIC has actively contributed to unaffordable advice, adviser exodus, collapse of PI market, distrust of advice industry to name just a few of their achievements in the retail advice space over 20 years.
But she things that clearer RGs are a way forward.
What an idiot.
Excellent well stated.
Stop bashing advisers. Instead, focus on the dodgy Insurance companies, Institutions and AFSLs profiteering from this fiasco.
So, ASIC sets the advice house on fire and now wants help from the advice industry as to how to put the fire out. So it then appears that as they are asking for help, does this infer they didn’t have a clue as to what they were doing ? Our taxes at work employing fools like this on high salaries with self interest in mind at our expense. CLOSE ASIC AND LETS GET PEOPLE WHO KNOW WHAT THEY ARE DOING WITH BUSINESS MINDS INVOLVED AS THIS LOT ARE CLUELESS….
Danielle’s comments ‘appear’ comforting, almost optimistic for advisers and the industry BUT I’m not ready to begin hoping ASIC’s going to change anytime soon, just yet.
They’ve caused so much carnage and destruction the last few years through their obsession to focus on what’s wrong with this industry, instead of what’s going well and right (which is so, so much greater in comparison), they have a long way to go before I’ll have any respect or time for them.
If you honestly want to REALLY start improving your relationship with and the pathway for advisers to reduce the consumer costs for financial advice Danielle, then refund the obscene fees you stole from advisers this year with your Funding Levy. The fines you’ve charged the big banks this year should easily cover that.
Then we can start chatting about shorter and more practical SOA’s and ROA’s…
500 submission you say? Imagine how many more you’d have gotten if 10,000 advisers hadnt already left with a further 6000 or so with no intention to continue….
More guidance on SOA’s….ha ha ha. This is what ASIC thinks will solve the affordability problems with financial advice. OMG. This is exactly why ASIC should never have been trusted by Jane Hume to complete this review. ASIC were never going to understand the depth of the problems or offer useful solutions because they ARE the problem.
Danielle “above my pay grade” Press is so incompetent it is astounding. Stop wasting time on issues you have been fully aware of all this time. How about ASIC actually do some work and design a SOA and ROA template that everyone can use, that is signed off by ASIC as compliant and stops licencees creating 100 page plus legal documents to cover their own backsides. How about creating clear rules that allows scaled advice to be quickly and efficiency provided to clients without the need for hours of justification. My accountant set up multiple trusts without one piece of advice in writing. However if a client requests a $5,000 withdrawal from their account we are required to produce a 10 page plus ROA with extensive working papers. If you had to wait for 500 submissions to work this out, then your pay grade needs to reduce substantially. You have delivered absolutely nothing in the face of a clear problem. Everyone talks about the red tape, cost and access issues for true financial planning advice, how about you stop talking and fix it, or move on.
Not once in 20 years have we seen ASIC reduce REGS, reduce Red Tape Costs and make Advice more affordable.
These ASIC clowns have zero idea of the Real Advice world.
They say they will help or want to help make Advice more affordable, yet they do the complete opposite.
ASIC are [b]Hypocritic Canberra Bubble Bureaucratic Corrupt Morons[/b] !!!!!!!!!!!!!!!!!!!!!
Actions speak far louder than words ASIC.
Never mind shortening the SoA. Let’s reduce the instances in which they are required. Given that the vast majority remain largely unread, they are of little benefit to the consumer and add significantly to the cost of advice. There HAS to be a better (& cheaper) way!
Of course Scaled Advice & RoA’s are acceptable: not POSSIBLE in practice but acceptable in theory.
Even the ASIC ‘model’ SoA’s are so light on practical compliance that any half-trained lawyer could drive a truck through the gaps. All advisers know this, that’s why we hardly dare use them.
No, while ever we have so many layers of laws, regulatory bodies, Royal Commissions, Law reform enquiries, and even industry bodies each with their own barrow to push we can NEVER meet the obligations in a 20 page SoA – let alone a genuine ‘scaled advice’ document.
Half of the time the regulators are providing ‘guidance’ and ‘how we will view’ something that isn’t tested in practicality, possibly is even contrary to the way that the law is written. So we are given a black letter law that says “X” and regulatory guidance that says “Y” and a royal commission that says “litigate”. Remember Haynes “Why NOT litigate”?
Has anyone EVER been able to do a REAL LIFE scaled advice document that they are willing to provide to ASIC as a benchmark, to be challenged and tested at Court?
My most recent plain vanilla Risk SoA was 78 pages long. Insanity.