The Association of Financial Advisers (AFA) has published its submission to the Quality of Advice Review Issues Paper, putting forward several recommendations including the provision of a three-year relief period for client consent forms.
The association recommend suspending the client consent obligations for three years to allow this obligation to be automated, enabling one signature per client.
The AFA argued a three-year relief period would allow for a standardised industry wide system solution for the collection and transmission of client consent forms.
“We believe that the Government should have played a role in driving or encouraging the development of an industry wide solution,” it said in its submission.
“We propose that consent forms be put on hold after the completion of the first full round (by 30 June 2022), so that efficient systems and processes can be developed.”
Responding to the 83 questions that were raised in the Quality of Advice Issues Paper, the association said it was firmly of the view that a quantum improvement in the overall operating and regulatory regime was required and that this would not be achieved by one single silver bullet.
“Fixing the problems in financial advice will require a number of material changes, and this will not be limited to only addressing the regulatory regime,” it said.
Further key recommendations included:
- The regulatory obligations for the provision of financial advice should be proportionate to the level of complexity and risk of client detriment;
- Achievement of regulatory certainty to better enable the provision of limited scope advice, including in terms of the requirements for the fact find process;
- Increased regulatory certainty on the obligations with respect to demonstration of compliance with the Best Interest Duty;
- Removal of the Best Interests Duty safe harbour and ability to demonstrate professional judgement or repeal of the “other steps” obligation and the ASIC record keeping class order;
- Fix existing issues with FDS compliance or removal of the requirement to report the previous year fees, which are already reported in product statements;
- Greater flexibility in the use of Records of Advice, including increasing the threshold for small investments and expanding it to include small life insurance cases;
- Enable greater access to client data through the Consumer Data Right, ATO Portal, my.gov.au and Centrelink;
- Retention of upfront life insurance commissions, but increased to 80% and a reduction in the year two clawback rate; and
- Support for small businesses to appoint Professional Year candidates and relaxation of some of the PY program obligations.