When ASIC helped planners on FOFA

The Australian Securities and Investments Commission (ASIC) has revealed the degree to which it acted to help financial planning firms when the Federal Opposition succeeded in having the Government's Future of Financial Advice (FOFA) regulatory changes disallowed in the Senate.

The regulator's latest report on relief decisions has revealed that ASIC had last year sent temporary "no-action letters" to five financial planning licensees relating to the ban on conflicted remuneration in circumstances where they would have found themselves trapped by the rapid change in political circumstances in Canberra.

"We provided five AFS licensees with a temporary no-action letter in relation to the ban on conflicted remuneration under Div 4 of Pt 7.7A of the Corporations Act," the ASIC report said.

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It said the AFS licensees were previously relying on regulations that enabled them to continue to pay and receive grandfathered benefits when a client switched from accumulation to pension phase within a superannuation fund that was not operating a platform.

"A no-action letter was granted for a period of three months, in addition to ASIC's facilitative compliance period, to give the licensees a transition period to cease the payment and receipt of these benefits," the ASIC report said.

The regulator said it had decided to grant the no-action letters because "the application of the law in these circumstances is uncertain and ASIC has not settled our views" and because it believed the AFS licensees were acting in the spirit of the Future of Financial Advice (FOFA) provisions by removing conflicted payments.

Further, it said it believed any potential conflict on the advice given to the affected consumers after the no-action period would be removed.

 




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