Financial planners and their clients will need to pay for the additional costs which will surround organisations becoming code-monitoring bodies, according to the Association of Financial Advisers (AFA).
In a submission responding to the Australian Securities and Investments Commission (ASIC) consultation paper on the new code monitoring arrangements, the AFA has pointed to the high costs involved in the arrangements and “how the broader industry can work together to come up with an effective solution”.
The AFA submission said it believed that “the development of Compliance Schemes and Monitoring Bodies is a process of building core infrastructure and should not be a point of competition”.
“We believe that the best solution will be developed on the basis of a collaborative, learning based approach that includes the involvement of ASIC and all the applicants and key stakeholders,” it said.
“Code Monitoring will inevitably be paid for by the financial advisers covered under the Compliance Schemes,” it said. “In the context of increasing costs to financial advisers from a number of recent regulatory changes, it is essential to keep the cost impose of code implementation as low as possible without jeopardising the aims of the legislation.”
The AFA said that the way in which ASIC had proposed Compliance Schemes and Monitoring Bodies would work “makes it particularly challenging for a single entity to pursue this on their own, making it likely that the best outcomes will come from multipole entities working together”.
The AFA submission also argues that the number of the requirements outlined by ASIC were “excessive, particularly in terms of needing to submit an initial application more than 12 months before the scheme starts and before the number of covered financial advisers is known”.
“This is also the case, but to a reduced extent, with the final submission that is due at least six months before commencement. We also believe that the requirements around monitoring are above that which we believe is necessary and that some of the timeframes are unnecessarily tight,” the AFA said.