Central message to ASIC: Give us regulatory consistency

If one clear message is already being sent to the Australian Securities and Investments Commission (ASIC) as part of its affordable advice review it is the need for regulatory consistency.

That point has already been driven home by the Stockbrokers and Financial Advisers Association (SAFAA) and is a point also central to the yet to be released submission formulated by the Association of Financial Advisers (AFA).

Speaking to Money Management, AFA general manager, policy and professionalism, Phil Anderson said that so far as his organisation was concerned one of the major problems which was impacting financial advisers and therefore the cost of delivering financial advice was the lack of regulatory certainty.

At the same time as calling for regulatory consistent, the SAFAA also echoed the views of many in the advice sector by pointing to issues around the Financial Adviser Standards and Ethics Authority (FASEA) regime and the code of ethics.

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The SAFAA said the FASEA code of ethics and particularly Standard 6 directly conflicted with the provision of scaled advice while saying that Standard 3 was “impossible to comply with and conflicts with the law”.

The SAFAA submission said it believed that Standard 6 needed to be removed from the code of ethics in circumstances where its continued existence in its current form would defat any efforts by ASIC to provide guidance on scaled advice.

“Standard 3 needs to be amended to utilise the wording of the Intent of Standard 3, so that the Standard states: Advisers must not advise, refer or act in any other manner where they have a conflict of interest or duty that is contrary to the client’s best interests, in order for it to fulfil its objective of supporting ethical duties that go beyond the minimum requirements of existing law, while remaining consistent with the law,” it said.

“In order to facilitate access to affordable advice, SAFAA strongly recommends that ASIC reconsider its conflicting views on limited advice and ensure its reports to licensees are consistent with the provision of limited advice.”

On the question of the affordability and availability of advice, the SAFAA submission said that members had been hit by a regulatory “blizzard” and that SAFAA members “report that the loss of experienced advisers due to the FASEA educational requirements is a top risk on their risk registers”.

“Stockbrokers who have been providing advice for many decades, with longstanding clients who are deeply satisfied with the service they receive, find it incomprehensible that they should have to sit an exam geared to financial planning and undertake educational qualifications in financial planning in order to retain their livelihood,” it said.

“They will therefore retire from the industry rather than face the humiliation of being required to train for a financial advice service so different from the one they provide and which they have no desire to offer.”