The Australian Securities and Investments Commission (ASIC) has claimed it was aware of the complexities around potential client disadvantage stemming from an end to grandfathering but did not inform the Royal Commission because it ran out of submission pages to do so.
The chairman of ASIC, James Shipton, told the Parliamentary Joint Committee on Corporations and Financial Services that the regulator’s submission to the Royal Commission dealing with grandfathering had “hit the page limit”.
Shipton had been asked by Queensland Liberal back-bencher, Bert Van Mannen, whether knowing there were issues around client disadvantage it would have been prudent for ASIC to have recommended a longer transition period for the ending of grandfathering rather than the “short transition period” it did actually recommend.
After acknowledging that ASIC had not fully apprised the Royal Commission of all of the issues around ending grandfathering, senior ASIC executive, Joanna Bird, acknowledged that the issues were significant and were being discussed with Treasury.
Van Mannen said that, while he was not opposed in general terms to the ending of grandfathering, he was concerned that the totality of the risk and consequence on clients involved had not been fully thought through.
“The fact that that work hasn't been done prior to you making the comments in your submission to the royal commission, which has subsequently informed legislative decisions made in this place, I find disappointing and frustrating in the least,” he said.
Bird acknowledged that the complexities existed and that they had been raised with ASIC by both product issuers and advisers, adding that “we have been discussing them with the Treasury as they settled the legislation and the regulations that will be made under them”.
“It is for that reason also that our review has a qualitative part, where we intend to speak to the product issuers about all those sorts of practical difficulties and try and help them solve them and report those to the government as well, because you are right; it is a complex situation,” Bird said.
“While the principle is right, as you say, there will be complexities around the edges as we try to implement it, and we want to work with industry to make that work.”