AFA News 16 December 2020. The AFA has been working on a policy statement over the last few months, however, over the last week, some of this has been superseded by Government Announcements, such as the Annual Renewal legislation and the announcement on FASEA. Nonetheless, it is important that we be clear with members on what our advocacy objectives are and what we will be fighting for in the new year. We have set out below our key objectives with respect to both the Royal Commission recommendations and the Professional Standards or FASEA requirements.
- Annual Renewal. The Government have just tabled their legislation on the annual renewal obligation. What has been proposed is a significant improvement on the draft legislation released in January 2020. The new FDS will be merged with the Opt-In notice and clients will have extra time to renew. Advisers will have a 60 day deadline to issue the FDS, and a total of 120 from the anniversary date for the clients to renew. We are in the process of doing a detailed analysis of this, however we do have a number of questions which we will be discussing with the Government. It is important to ensure that this legislation is not rushed through the Parliament before all the issues are identified and solutions found.
- Single Disciplinary Body. The Government have announced changes to introduce a single disciplinary body, which will result in the winding up of FASEA. There is not a lot of detail on how this will work. Ultimately what we want to see is a single regulator, a single set of rules, a single code, a single disciplinary system and a single affordable fee. This reform provides an important opportunity for the rationalisation of the financial advice world. We would not want to see this opportunity wasted and we will be talking to Government about how to achieve this outcome.
- LIF Review. Next year is the scheduled timing for ASIC to undertake the LIF review. This is a very important exercise, as it will lead to ASIC preparing a report and potentially making a recommendation to Government on the future of life insurance commissions. We strongly oppose any further reduction in life insurance commissions and believe that in order to ensure the retention of a viable advised life insurance market, and access to advice for everyday Australians, that the Government needs to reconsider the LIF with respect to increasing upfront commissions and modification of the clawback arrangements.
- Experienced advisers should be given credit for the courses and CPD that they have undertaken in the past, as was suggested in the Explanatory Memorandum to the Professional Standards Bill. We propose 3 subject credits for an adviser with over 15- years’ experience, 2 subject credits for someone with between 10 and 15 years’ experience and one subject credit for any adviser with over 5 years’ experience. This will recognise the CPD undertaken during these years of practice.
- Financial advisers should have the flexibility to study areas that will be beneficial for them, their businesses and their clients.
- More support and specific guidance is required for all exam candidates, and particularly those who have failed the exam. We appreciate the huge emotional burden that the exam is causing and have been talking to FASEA about how more support can be provided.
- The Code of Ethics needs to be modified to ensure that it is practical and consistent with making quality advice both accessible and affordable for everyday Australians. The Code needs to provide certainty and should not re-write the law as is evident in Standard 3.
As always, your feedback is welcome at firstname.lastname@example.org
Issued 16.12.2020. AFA Policy & Education Update