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".
Recommended for you
With the final tally for FY25 now confirmed, how many advisers left during the financial year and how does it compare to the previous year?
HUB24 has appointed Matt Willis from Vanguard as an executive general manager of platform growth to strengthen the platform’s relationships with industry stakeholders.
Investment manager Drummond Capital Partners has announced a raft of adviser-focused updates, including a practice growth division, relaunched manager research capabilities, and a passive model portfolio suite.
When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
