Govt should have acted sooner on grandfathering: Batten
Following "somewhat ambiguous" statements on grandfathering in Consultation Paper 189, the Australian Securities and Investments Commission (ASIC) is set to release an updated regulatory guide in the next few days.
That's according to Minter Ellison partner Richard Batten, who attended an ASIC roundtable on the Future of Financial Advice (FOFA) reforms in Sydney yesterday.
There has been confusion in the financial services industry about the grandfathering provisions, and whether or not they will extend to new clients who are serviced under existing arrangements, said Batten.
"Many institutions and dealer groups would have received legal advice about the effect of the grandfathering provisions, which would in many cases have been inconsistent with what ASIC has said," Batten said.
Treasury recently revealed that it believed the current legislation on grandfathering is "too liberal", suggesting that the Minister for Financial Services, Bill Shorten, could announce an amendment to the law before the 1 July implementation date.
But according to Batten, it is "particularly unsatisfactory" that the Government has waited until four months before the implementation of FOFA to clarify the law.
"[The Government] has the power to take corrective action if it becomes apparent that the law it has passed doesn't have the legal effect it intended it to have - if that is the case," Batten said.
Madison Financial Group head of compliance Cheyenne Walker said a few organisations are in the process of getting external legal advice about the issue, but until the final regulation is released "everything is on hold".
"What I've been hearing is that Treasury is doing the regulation differently to how the legislation was intended," she said.
She conceded that it probably isn't in the spirit of the FOFA reforms for the grandfathering provisions to apply to new clients - but "last minute changes" four months out from the implementation date are "making people nervous".
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