The Australian Competition and Consumer Commission (ACCC) has been warned against imposing more cost and regulation on financial advisers via the implementation of Consumer Data Rights (CDR) rules.
The warning has come from the Financial Planning Association (FPA) which has expressed concern that together with needing to be registered with the Australian Securities and Investments Commission (ASIC) and the Tax Practitioners Board (TPB) advisers would need to be registered with the ACCC.
It said that financial advisers were already the subject of a “plethora of regulators” with financial advice being regulated and monitored by seven regulators.
“…the FPA is concerned about the administration and cost of maintaining their registration with the ACCC. Many of these regulators operate under or will shortly transition to compulsory fees, cost and levies,” the FPA said. “This surmounting regulatory cost increases the cost to provide advice, which hinders the Australian consumer’s ability to afford financial advice when they require it.”
The FPA has asked the ACCC to clarify what costs for advisers would be associated with the CDR regime, noting that any additional cost associated with registration would “exacerbate the cost of financial advice, noting we also expect software licensing fees to increase to cover the costs associated with providers”.
It noted that there were already Government registers of financial planners held with ASIC and the TPB with these registers also used by the general public to verify the status of their financial planner, accompanied with education resources to help consumers navigate financial providers.
“The FPA would, therefore, recommend that rather than creating a third register, there is an opportunity to use these existing registers. This provides an opportunity to reduce duplicate administration activity and costs, as well as assisting with future verification of ‘principals’ as these will be mapped to ‘CAP providers’. Alternatively, the ASIC or TPB registers could be used to auto-register financial planners and given the requirement that these are kept up to date can be considered as the source of truth for the ACCC register of principals.”
The submission said that an additional consideration for the ACCC was that in terms of consent, financial planners often acted as the representative of the consumer which product providers and were required to maintain third party authority to represent their clients and access their financial information, as well as consent for collection of advice service fees.
“These are to be mandated on an annual basis depending on the development of recommendations of the financial services royal commission. Thus, FPA recommends that rather than creating a new process or standard, consumers are able to authorise their financial planner as a ‘principal’ as part of this existing process. This will assist in minimising cost and regulatory duplication,” it said.
