The Financial Services Council (FSC) has developed a ‘proposed personal advice framework’ which it hopes will build on existing changes while delivering a simpler framework for advisers and consumers.
In the organisation’s submission to the Quality of Advice Review, it outlined several areas which could be improved or amended.
It said: “The FSC refers to this framework as its ‘proposed personal advice framework’ in acknowledgement that all advice is personal but capable of being scaled up or down in terms of disclosure and obligations aligned to the professional judgement of the adviser and the consumer need clarified ultimately in the scope with the consumer. All advice would be termed, and recognised, as ‘personal advice’ aligned with the consumer perspective (eg. Intra fund advice, limited advice, digital advice would all be regarded as personal advice).
“The adoption of the FSC’s personal advice framework will secure the benefits of changes in recent years while delivering a simpler overall framework.”
It also suggested the Australian Securities and Investments Commission (ASIC) set up an Advice Unit tasked with the responsibilities of introducing a principles-based regulatory approach ahead of 2026 which included development of sector-standard materials, automation of the advice process to reduce advice costs and holistic support to the profession.
The FSC’s personal advice framework included:
- The abolition of the safe harbour steps for complying with the Best Interests Duty and amending the Code of Ethics to reflect this change;
- The introduction of a technology-neutral Letter of Advice with simplified requirements supported by scalable advice obligations;
- Redefining advice with a personal advice-general information framework in a manner agnostic of financial product that is consulted on with industry before implementation.
- The retention of the Australian Financial Services License and the introduction of a practicing certificate for financial advisers administered by a central body;
- Intra fund advice to be incorporated into the proposed personal advice framework.
- No exemption to the personal advice framework for the accounting profession.
- Removal of personal advice from the Design and Distribution Obligations (DDO).
- A system of principles-based requirements, and industry-led compliance to characterise annual renewal and the interactions between trustees, advisers, platforms in honouring fee consent obligations to consumers;
- Redevelopment of regulatory guidance that is more exemplary and providing the Regulator greater capacity to engage industry on compliance such as an expansion of the fintech regulatory sandbox; and
- Redefining the thresholds for wholesale investors and in-building a method by which a financial adviser can ascertain the suitability of a consumer for distinction as a wholesale consumer.