ASIC has been handed a mammoth task in delivering FOFA, underscoring the tiny window available to the financial services industry to prepare for the new regulatory regime.
Given how focused he is on keeping the industrial relations portfolio on track and dealing with the challenges of seeking to remain in government, the Minister for Financial Services and Superannuation, Bill Shorten, has quite possibly lost some of his focus on progress with respect to the Future of Financial Advice (FOFA) implementation timetable.
But, for the record, when the inevitable Christmas/New Year shutdown is taken into account, companies operating in the financial advice arena probably (as of the date of this edition of Money Management) have barely eight months to read, digest and then action the changes which will flow from FOFA.
There is generally no shortage of critics of the Australian Securities and Investments Commission (ASIC), but on this occasion, the regulator cannot be blamed for the pace at which it is delivering the regulatory framework which is intended to underpin FOFA.
The Government has inflicted a mammoth task on ASIC and the organisation is moving as quickly as it sensibly can.
But what is now blindingly obvious is that the FOFA bills which the Government succeeded in passing through the House of Representatives and the Senate are sufficiently broad and non-specific that ASIC has been delegated a considerable task in delivering regulations which are sensible, workable and achieve the desired outcomes.
The magnitude of the task was evidenced in ASIC’s release of the materials around scaled advice and the best interests duty.
So too, was the resultant scale of the task confronting the financial services industry, with the regulator’s approach to scaled advice not entirely in line with what everyone had expected.
What needs to be remembered, of course, is that scaled advice and the best interests duty are just two of the crucial elements in the FOFA equation.
Equally crucial and more controversial elements such as the grandfathering arrangements and the ultimate shape of codes of conduct have yet to find their way through the ASIC system.
So allowing for the fact that ASIC produces its draft approach to each of the FOFA regulations and then opens the way for a period of consultation with the industry, it is likely to be close to Christmas before the industry has seen all of the draft proposals and probably February/March at the earliest before the regulations are known in full.
This means that, at best, financial services companies will have barely four months of certainty with respect to the FOFA regulations.
Arguably, this is not long enough for the affected companies to position themselves for optimal outcomes.
It is to be hoped that someone in the minister’s office is keeping a watching brief on developments with respect to the FOFA regulations and will recommend some flexibility around the 1 July 2013 implementation date.
It is also within the scope of ASIC to exercise some discretion in dealing with any laggards.
