AFA hits back at regulators' advice guidance

The regulator’s guidance to superannuation trustees on advice fees contradicts what has been relayed to Senate Estimates, is excessive, and ignores the Privacy Act obligations, according to an association.

Association of Financial Advisers (AFA) chief executive, Phil Anderson, hit back at the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) after the two regulators issued a joint letter addressed to super trustees on oversight of advice fees charged to members’ super accounts.

Anderson pointed to wording from the regulators that seemed to warn “trustees about trusting financial advisers”.

Related News:

The letter from the regulators said: “Reliance on attestations by financial advisers or advice licensees that services have been provided has limitations due to the potential for conflicts of interest, so cannot in all circumstances be relied upon.

“We do not consider it sufficient to rely solely on statements from financial advisers or members that the sole purpose test has been met.”

Anderson also said the letter demonstrated the regulators expected trustees to review statements of advice (SoAs) which contradicted answers provided by APRA to Senate Estimates and ignored the Privacy Act.

“In less than a month, APRA have gone from describing the situation in terms that they have not been prescriptive, to specifically stating that they have had expectations that trustees review SoAs,” Anderson said.

“In this letter, there is, at best, a cursory reference to privacy obligations. Is it really sufficient to have trustees communicate to their members that they may demand copies of documents that contain private personal information to prove that what clients have already consented to is okay?

“Not only do these requirements for trustees ignore the Privacy Act obligations, which is putting clients at risk, it is also excessive and will add significant administrative burden for financial advisers.”

Anderson said as recommendations of the Banking Royal Commission had been implemented why did the regulators need to demand more to be required.

“Well, we would argue that the Royal Commission looked at this issue from an institutional perspective, not a small business financial adviser perspective, and in any case only 10 individual advisers were reviewed through the Royal Commission hearings and fee-for-no service was not a focus of these individual adviser matters,” he said.

“Whilst it is important to acknowledge that super fund trustees have more obligations than banks, it is illustrative to consider what the equivalent requirement would be if banks needed to do something similar. Can you imagine banks requiring gyms or streaming services to get client consents for direct debits signed every year and providing evidence of usage of these services?

“Is this really necessary and should it be the role of Government agencies to demonstrate such lack of trust in financial advisers who provide a critical service to the Australian population? It is appropriate that financial advisers and super funds both argue against this excessive, unnecessary, and costly interference.”

Recommended for you




Welcome to the democratic Australian, where dictatorships rule…

ASIC and APRA are using the sole purpose test as a weapon against the financial planning profession. This is why financial advice needs to be urgently added as an ancillary purpose to the SIS Act. I have seen dental nurses provide advice and arrange for fees to be removed from super funds for cosmetic procedures, but a licensed adviser cannot have fees deducted for advice which will significantly enhance the retirement outcomes of an individual.

The FASEA standards, ethics subject and higher education were introduced to make us the newest profession in the world. It was done so society can empower us to look after their best interest. At what stage will advisers be trusted by the regulators?

until, after they are all gone.

sadly, it is often the case that once something is gone you begin to value it the most. that is what will happen with financial advice.

the government and the regulators don't understand the implications yet, but it will be very apparent after 2022, and 2026.

Thanks Phil, regulatory overreach at its worst - more unnecessary documentation and if APRA focused on supervising Trustees, which it proved it didn't in the RC and ASIC did its job of supervision and monitoring then we can get on wth helping Australian consumers with the advice needs.

How disappointing that ASIC's culture of bias and persecution seems to have infected APRA as well. Australia desperately needs regulation of its regulators.

Ms Press has to go !!!!!
This disaster of a so called regulator says she wants more affordable Advice every couple of weeks.
And every couple of weeks she loads more and more BS REGS onto Advisers via HER INTERPRETATIONS of law.
Then Ms Press claims innocence, it’s the law not ASIC. It’s above my pay grade.
Rubbish Ms Press must go !!!!

Press needs to go she has a conflict of interest she has been sitting on boards for companies like """Robo advice SixPark """ who are just fund managers selling direct to customers...

Now guess what they are talking about doing watering down regulations for companies to sell "Digital advice" eg no soa and no client protections, It is not advice and never will be. Digital advice/ Intra fund advice is just product flogging and client retention tools.... its a Free service which we charge 100 million a year for that very few use and isn't disclosed.

I find this absolutely insulting ! The regulators are treating us like bloody children ! Have any of the faceless people at ASIC and APRA ever received personal financial advice? I suspect not, as they would experience the value and material benefits financial advisers provide.

There is so very little reward to be had from remaining a financial planner today.

I wrote a long and detailed comment then realised it was pointless. Neither the government nor the regulators nor any pressure or lobby group consider advisers to be ethical or professional. We are forced to meet conflicted, poorly-executed policy and yet receive zero professional considerations. We are expected to provide what clients want but only to assist, advise, bill and charge according to the expectations and dictates of wealthy, well-informed, bureaucratically capable people. Which makes our services inaccessible to the vast majority of the population, who can reasonably add "expensive" to the standard financial planner nomenclature of "unethical", "criminal" and "incapable of acting in anyone else's best interest".

Here's an insidious example.. One institution has just sent out its new fee consent forms. The adviser must discuss the basis on which their fees The adviser is asked to explain the basis on which percentage fees are calculated. But no need to do that if fees are fixed dollar amounts. Because clearly, fixed dollar amounts cannot be unethical or inappropriate. What level of scum are advisers being measured against here?

Every man and his dog being able to ask for and assess a client's very personal circumstances is so inexplicable i can't even begin to see how even an idiot would consider it appropriate.

I could not agree more with you Michael. already masters qualified once, then a second time with a fasea approved one, passed the fasea exam and on my way out.

this is all bordering on the ridiculous now.

every now and again there is wisdom in the crowds. the financial planner stampede, which was first an exit march, then an exodus, and now a stampede (yes, i coined that phrase so (tm)) confirms what you are saying. the vast majority that are leaving are already fasea qualified and exam passed advisers with a long history of working in the industry.

The regulators are controlled by the product providers, they are a captured regulator.
The key personnel at APRA/ASIC previously worked for product providers.
The adviser channel of product distribution has a very low profit margin so an environment needs to be created where direct to customer distribution is necessary.

Add new comment