AFA News 21 January 2021. The AFA has welcomed the opportunity to provide feedback in response to ASIC’s consultation paper 332 on promoting access to affordable advice for consumers. This is an important opportunity to contribute ideas to help address the current issues with access and affordability of financial advice. This consultation is being closely watched by the Government who are equally concerned about the issues impacting the financial advice profession. Responding to this consultation exercise gives us the opportunity to present our vision for the future of the financial advice regulatory regime.
Whilst much of what needs to be done will require legislative change, ASIC also plays a critical role in the guidance that they provide along with their approach to the supervision of financial advice and enforcement of the law. We believe that there is much that ASIC can do to reduce the cost and complexity involved in the provision of financial advice.
Defining a Future State for the Financial Advice Regulatory Regime
In our submission we have spoken about what we see as an ideal future regulatory regime, which would reflect the following key elements:
- A high level of regulatory certainty.
- Easy access to guidance on regulatory requirements.
- An efficient advice process, with each step adding value to the client experience and outcome.
- The avoidance of duplication in requirements, oversight models and fees.
- An environment where licensees can make sensible informed decisions with respect to the compliance regime they operate.
ASIC can play a very important role in delivering regulatory certainty that enables licensees to define rules for advisers that are efficient and enduring. The current regime is excessively influenced by the fear of regulatory intervention and is therefore unsurprisingly risk averse. This is increasingly being realised; however, the challenge is working out how to fix it.
Our key recommendations addressed in our submission include the following:
- The establishment of an ASIC/Treasury/Industry working group on financial advice regulatory and process improvement.
- The creation of an initiative to deliver improved regulatory certainty.
- An appreciation of the importance of seeing the financial advice community as predominantly small business operators who are each trying to do the best that they can for their clients.
- An increased focus by the regulator upon the prevention of compliance failures, rather than regulatory intervention and remediation.
ASIC Funding Levy
Late in 2020, we became aware that the actual funding levy for 2019/20 had been subject to a material additional increase and was now set at $2,426 per adviser. It appears that the Levy increased significantly as a result of the Royal Commission enforcement activity that is being undertaken by ASIC. We do not accept that continuing small business financial advisers should be expected to pay for this activity by ASIC. We discuss this issue in our submission and we have called on the Government to provide relief and to address the obvious problems in the funding model. Please click here for a copy of the final ASIC Funding Levies.
Please click here to see a copy of the AFA’s CP 332 Submission.
It is our belief that this is the start of the process to address the current problems in the financial advice sector, and this process is one that we have encouraged our members to contribute to. Any change process involves risks, however the best way to achieve positive constructive change is to be an active participant in the process.
We welcome any feedback from members on this submission or their thoughts on how the financial advice sector can be improved. Please send any feedback to email@example.com
Issued 21.01.2021. AFA Policy & Education Update