The AFSL regime should not be 'one size fits all'
The Stockbrokers and Financial Advisers Association (SAFAA) has urged the Australian Law Reform Commission (ALRC) to consider stockbrokers as distinct from financial planners and not apply a “one size fits all" approach.
In its submission to the Interim Report A Financial Services Legislation, SAFAA’s chief executive, Judith Fox, endorsed an Australian Financials Services License (AFSL) regime that had a very wide scope and covered a wide variety of industry participants.
But she said that it was worrying that Government regulation seemed to assume all advisers were financial planners.
“This disadvantages stockbrokers and investment advice firms and their clients, as well as other specialised advice services (for example, accountants providing advice to SMSFs),” Fox said.
“It is important that regulators and government understand the way the stockbroking and investment advice industry works and fits within the broader financial advice service ecosystem.”
Fox said SAFAA was supportive of principles-based regulation but that it was important to balance it with prescription.
She said the organisation of stockbrokers did not share views held by other parts of financial services sectors on a number of issues including individual licensing, the general advice definition, changing the wholesale investor test and separating product from advice.
“Individual licensing applies a financial planning lens to financial services legislation and would require our members to squeeze into a framework that does not suit them or their clients,” Fox said.
“If the issue of individual licensing is included in the final terms of reference of the Quality of Advice Review, SAFAA will be putting forward our members’ views.”
SAFAA noted that there had been suggestions that general advice should be renamed as ‘information’ or ‘product sales information’.
“Calls for a change in the definition of the term general advice is one example of where a ‘one-size-fits-all’ approach to financial services regulation does not work for stockbrokers and investment advisers and we will be raising this issue in the Quality of Advice Review,” Fox said.
“Given the significant implications for stockbrokers, investment advisers and their clients, should any change to the wholesale investor test be introduced, it is important that any call for change be supported by evidence.
“Before embarking on any further reform we consider that is important to seek the views of wholesale clients who will be impacted by any change.”
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