The market for advice is shifting in many ways post 2020. Recently released research shows about four out of ten Australians will seek financial advice over the next 12 months. Government is implementing further Financial sector reforms to strengthen the financial advice and provide consumers with better access to affordable and high-quality financial advice. Legislation implementing these reforms is intended to be introduced into Parliament in the first half of next year.
Feedback received from members during consultation meetings listed compliance costs as the single most important barrier that prevents or restricts advisers from providing affordable and accessible advice to consumers.
ASIC has issued a Consultation paper 332 seeking information from Financial services Industry as well as other stakeholders, to promote access to affordable advice for consumers. The Consultation process has now entered stage 3- Discussions with various stakeholders.
In response to the Consultation paper 332, a submission has been made by the SMSF Association, that sums up its recommendations below-
- ASIC should take a closer look at the objectives of complying with the existing regulatory requirements and what purpose they are meant to serve for the consumer, adviser, AFSL and ASIC.
- ASIC should explore how the advice process can better utilise and leverage the current file note and recording systems advisers use.
- ASIC should explore what lessons can be learnt from wholesale clients and the advice process relating to these consumers, where consumers generally have a higher level of financial sophistication and greater access to affordable financial advice.
- Within the existing legislative framework, ASIC should introduce a cap on the annual levy for financial advisers (or limit percentage increases), or allow for a lower level of cost recovery in upcoming years
- ASIC’s guidance and explanation of how limited advice can be provided should take a more influential role to support financial advisers to provide limited advice where appropriate, despite current concerns of their AFSL.
- ASIC should explore guidance that clearly explains the ‘reasonable’ factors that need to be addressed by financial advisers when providing consumer-driven limited advice, particularly when providing limited superannuation advice.
- ASIC should explore if any learnings can be taken from the Government’s changes to the credit framework and responsible lending laws which reduce red tape, improve competition and enable a more efficient flow of credit while maintaining strong consumer protections.
- ASIC should review the purpose and usefulness of Statements of Advice (SOA) and modernise the relevant regulatory requirements.
- ASIC should provide further guidance on how to produce an SOA or ROA for limited advice scenarios.
- ASIC should use their ‘information sheet’ format for updated guidance on providing limited advice.
ASIC should continue to consult and engage with industry when appropriate on improving accessibility and affordability of financial advice as the marketplace for financial advice continues to evolve rapidly.
The limited licence framework has failed and should be removed and transitioned to a new consumer-centric framework. This may be in the form of a ‘strategic advice’ offering.
SMSF and superannuation advice lends itself to ‘strategic advice’ and ASIC should explore how this may be implemented in the advice profession as part of the current consultation process.