The Financial Planning Association of Australia (FPA) is proposing changes to make financial advice law simpler and less burdensome for advisers.
These were part of a review by the Australian Law Reform Commission (ALRC) of the Legislative Framework for Corporation and Financial Services Regulation- Interim Report A. This was working to simplify and support the professional services provided by financial planners through improving the operation and structure of the Corporations Act 2001.
In its submission, the organisation said it broadly agreed with the structural amendments proposed by the ALRC and suggested the language and structure of the Corporations Act 2001 should also be amended to allow for better engagement with the financial services sector.
Proposals by the FPA included renaming the term ‘general advice’, reviewing terms such as ‘financial planner’ and ‘financial coach’, revising the test for ‘sophisticated investor’ and separating the regulation of financial products from regulation of advice. It also proposed removing the requirement for an AFSL to cover the provision of financial advice.
Sarah Abood, chief executive of the FPA, said: “The FPA supports the ALRC proposals to make financial advice law and regulation simpler through a consolidated ‘rules book’ for financial advice. This approach would help improve the affordability and accessibility of financial advice for more Australians.
“The financial planning profession doesn't need more regulation; it needs better regulation. Financial planners are required to interpret a never-ending list of contradictory requirements placed on them. To ensure compliance, planners are required to comply with four laws regulated by eight regulators with additional oversight from Australian Financial Services Licensees and professional associations and additional consumer complaint mechanisms through two ombudsman services and the courts.
“We believe this creates a significant risk. Financial planners are not lawyers, but it may be that the regulatory and compliance requirements under one Act and Regulator differ from those of others, leaving financial planners at risk of breaching one requirement in order to meet the conditions of another.
“As well as the compliance risk, this has a significant impact on costs and efficiencies, particularly on small licensees who have less support and will find it find it harder to meet the increasing regulatory demands.”
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