The recent enforceable undertaking (EU) imposed on AMP Financial Planning by the Australian Securities and Investments Commission (ASIC) has potentially made compliance with financial services legislation more difficult, according to a senior executive at Asgard Wealth Solutions.
Director sales and distribution with Asgard, Wayne Wilson, feels the regulator has done this by declaring that its interpretation of the principles-based legislation is more correct than the interpretation of some major financial services organisations.
Wilson said the ruling has the potential to undermine the whole system of principles-based legislation.
“That’s the very essence of understanding the interpretive components of the EU … I think the industry’s joint concern would be when the police start to become the interpreters, which isn’t allowable in the rest of our legal system, then we’ve got an issue,” Wilson said.
“I just think that there’s a feeling in the industry that there’s a bit of interpretation in there that has maybe moved the line a little further than people would expect it to go and that then makes life exceptionally difficult to comply,” he added.
Wilson pointed out that the incident could end up undermining the reasoning behind the introduction of the Financial Services Reform Act (FSR).
“The whole purpose of FSR is not to say you’ll never make a mistake, it’s to say we have a range of systems that can govern us and minimise the likelihood of a mistake, and certainly there should never be any systemic mistakes,” he explained.
Wilson also suggested that perhaps the regulator was trying to achieve too many outcomes through its interpretation of the legislation.
“I think ASIC’s also looking at trying to address conflicts in businesses that own funds management, administration, distribution and pricing through the whole plain, and again I think the industry view would be that that’s not ASIC’s role,” he said.
