New regulations for platforms: ASIC

The Australian Securities and Investments Commission (ASIC) is currently examining whether further regulation is specifically needed for platforms, although at present it is unclear whether they should be defined as a product or a service.

Speaking at the launch of the Financial Planning Association’s (FPA’s) Financial Planning Week in Melbourne, ASIC deputy chair Jeremy Cooper confirmed the regulator was trying to create a policy regarding platforms.

“Platforms are the way of the future,” he said.

“The issue is: do the public understand what the platform is doing and is their role being explained well enough?

“We are still trying to work out whether a platform is a product or a service.”

Cooper said the regulator had seen planners describing platforms as a product and he noted commissions were paid by platforms to planners.

“Platforms do have a role to play in areas such as self-managed superannuation funds where they can provide custody,” he said.

“But we need a cleaner explanation of what platforms can do for clients.”

FPA chair Corinna Dieters said the theme of this year’s Financial Planning Week is financial literacy and promoting the value of advice.

“We are starting to plan the second year of the ‘Dazza’ campaign as it is important to educate consumers on good advice,” she said at the Melbourne launch.

“Every Australian has the right to receive objective financial planning advice.”

Also speaking at the launch, Parliamentary Secretary to the Treasurer Chris Pearce said as part of the Government’s focus on national savings, financial literacy was very important.

“I know the value of good advice and I think Australians need good financial advice,” he said.

Pearce said the first move to achieving this was financial literacy and the creation of the Literacy Foundation, as well as a program to teach children practical financial advice.

“The second key to good financial advice is the Government providing the right level of regulation to create confident investors,” he said.

“They need to know they are protected by law and I am pleased to see the financial planning industry responding to the new levels of compliance.”

Pearce said he continues to believe self-regulation is the right model for the industry and the recent moves on conflicts of interest by the FPA were to be applauded.

“I support the industry self-regulation very strongly and it seems to be setting the right standards for the conduct of financial planners,” he said.

“Clearly the FPA recognises the value of professionalism and I want the FPA to work with the regulator and the Government to get the message across to the Australian public that financial planners are doing the right thing for investors.”

After Peter Costello’s statement on Budget night that there was no role for financial planners in providing advice to retirees, Pearce was asked if this was the case.

“I would have thought it would be the opposite,” he said.