AFA outlines ways regulatory uncertainty can be reduced

The Association of Financial Advisers (AFA) has outlined the key levers it will be targeting to reduce regulatory uncertainty in the Quality of Advice Review.

Speaking at an AFA webinar, chief executive Phil Anderson, said the association would target four primary objectives in the review including reducing complexity, reducing the cost of financial advice and the cost of running a business, improving client capacity and service process in firms, and ensuring the financial advice profession was sustainable.

Unpacking AFA’s target to reduce regulatory uncertainty, Anderson said the association would look at better enabling the defining of the scope of advice to better facilitate the provision of limited scope advice.

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“This is one of the things that links back to the code of ethics and how easy is it to define a very tightly defined scope of advice for a client in order to enable you to be very focused in what you do,” he said.

“Now, all sorts of challenges come up in this, whether the code of ethics is a factor, licensee expectations is a factor. But what if we had regulatory certainty that allowed you to just dive into a particular issue with appropriate consideration of other factors and give really limited scope advice?”

Anderson said the association would also push for certainty on client data collection for limited scope advice.

The AFA also wanted to see a policy focus on the simplification of Records of Advice, according to Anderson, acknowledging the work already done in this space by the Australian Securities and Investments Commission (ASIC).

“Now, I think with Records of Advice, we want to see the simplicity of providing records of advice as a focus, but also the opportunities,” he said.

“But what we want is more certainty around when you can provide the Record of Advice.”

Anderson’s other key levers to reduce regulatory uncertainty were:

  • Clear articulation of requirements for Best Interests Duty compliance;
  • Clarity on the requirements for consideration of alternative strategies and products;
  • Certainty enabling shorter advice documents;
  • Increased certainty with how AFCA will judge complaints; and
  • Introduction of a mechanism/forum to resolve regulatory uncertainty issues.



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