Parliamentarian references adviser fears of ASIC retribution

30 June 2020

A member of a key Parliamentary Committee has asked the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) whether advisers have stopped short of challenging the Australian Securities and Investments Commission (ASIC) because of fear of regulatory retribution. 

NSW Liberal back-bencher, Jason Falinksi asked the question during a hearing of the House of Representatives Standing Committee on Economics and said that had been the feed-back he had received from some constituents. 

He also asked whether mental health issues had been generated by adviser concerns. 

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Both the FPA and AFA said that the financial planning industry is as at tipping point with around 6000 advisers having left the industry and only around 51 graduates having entered in the first half of 2020. 

The FPA and AFA also made clear that there were continuing issues with the operation of the Financial Adviser Standards and Ethics Authority (FASEA) regime, not least Standard 3. 

FPA chief executive, Dante De Gori said that his organisation’s members were broadly supportive of the objective of the FASEA regime but were concerned about the manner in which that regime had been implemented by FASEA itself. 

AFA general manager, policy and professionalism, Phil Anderson said that his organisation’s members were concerned that FASEA had not addressed the value of prior learning and continuing professional development (CPD) and the manner in which this had impacted the future of older, highly experienced financial advisers. 

Both the AFA and FPA said that the level of regulation being imposed on the industry was making the cost of delivering advice cost-prohibitive and that this was occurring at a time when, faced with COVID-19, clients badly needed access to advice. 

FPA chair, Marissa Broome pointed to the rising costs confronting financial advisers, noting that she was a practicing financial planner holding her own Australian Financial Services License and had seen compliance costs rise ten-fold. 

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...and in true Chief Wiggum style, the Parliamentary Committee will type up our concerns on their invisible typewriter never to be heard from again.

However, it has been brought up by the Government's back-bench and they are pursuing it. Don't forget, the then Opposition Treasurer prior to the 2013 Federal election had made numerous comments about restructuring financial services regulators. Though, he didn't have the ammunition to fire them.
The notion of needing a regulator for the regulators is the first step in this. Further, when this regulator of regulators reports to the Government in 2022 don't be surprised if the current regulatory roles of ASIC, APRA, ATO, TPB, FASEA, et al are recommended to be changed.
At the moment, the Government appears to be keen in allowing this rabble of regulators to maintain their civil war and wait for them to eat each other.

Would could easily imagine its like back chatting a Police Officer when you are pulled over... most (normal?) people say "yes sir/ma'am, sorry..." ask some clarifying questions and be on their way. You don't tend to tell them what you think of the laws (which they may not agree with either, but have to uphold), nor whether you think some other officer was out of line when your mate got a ticket for parking badly...

There is enough speculation in the winds about ASIC "targeting" individuals they either have had "lip" from, or to "make an example of them"... so why would anyone want to put their heads above the line?

I would think that is where our associations have to step up, to represent us broadly, and collectively, because on an individual level we don't have the ability to shoulder the pressure should they turn their "laser" on us.

you are crazy posting a comment with your full name. they will target you now.

get your comment removed you crazy fool. they will come after you now.

Of course this is the case. It is known they have no love for planners, and zero accountability so of course they would feel free to exact any type of vengeance on a planner daring to challenge them.

Planning being so subjective, it could easily be found that there was a fault in anyone's client work that can then be broadened to 'systemic faults' giving ASIC a clear ride to ending your career and business.

It was reported that following the RC they openly stated they had a mandate for 'heads on sticks' (their terminology) so how could an individual ever raise theirs up and put their neck on the line?

ASIC is the closest thing we have in this country to a 'police state'. They are a power unto themselves.

The Gov can't reign them in, not that they show any desire to do so. Following ASIC's rebuke at the RC, they have gone even more rogue with fees, levies and ridiculous regulations at all levels - except anything to do with industry funds.

Of course most financial advisers are paralysed with fear that ASIC might walk in and cite them for whatever ASIC might choose to cite them for and thus put them out of business. We are all second guessing ourselves constantly....."did I cover this?.....did I cover that?.....did I mention this?...did I mention that?". Advisers are flat out writing 80 page thesis' (i.e. Butt Covering Memo's) for simple advice that could be delivered meaningfully and affordably, often within max 10 pages. But alas, Public Servants and Lawyers got into the mix to complicate things (i.e. protecting consumers) and so now Advisers write copious documents consumers rarely read nor understand purely to protect Advisers from Litigation Junkies and in so doing rendering advice unaffordable to the masses the regulators say they are protecting.

The FPA has to own the fact that failing to campaign against the Fed Govt's move to towards annual fees (where informed consent by the client has been given), whereas intrafund advisers are exempt from Opt In requirements (when informed consent has not been given], is resulting in a massive shortfall of new entrants into the Industry. It's simply too hard to get paid by the average mum & dad who are seeking advice. Fortunately not all representative adviser organisations are prepared to accept this. So get ready for an exodus from the FPA & AFA in July. Intelligent advisers will decline to outlay for ever increasing business overheads, while being pressured to work for free. Games up.

i dont' have any confidence in the regulator, that they are principled and will do the right thing. i don't think anyone in the financial planning community has any confidence in ASIC, that is why we do not engage with them and keep under the radar.

it's scary. i am even typing up this comment while going incognito on my web browser so it doesn't get traced back to me for fear of retribution, and i am already a fasea qualified degree holder and passed the exam, and completed the transitional cpd 3 months before 30 June with a very compliant history.

there is no way a profession of financial planning can be formed when the regulator is so prejudiced towards the sector. given that is the present situation, there is no way we can inspire confidence in ordinary Australians to take up advice while we are all keeping up appearances.

this will sadly end badly as by 2024, there won't be much of an advice sector left. to those thinking robo advice will fill the gap, yeah maybe a small proportion. it's a huge loss to the country and in hindsight when we do reflect on it after it has come to pass, we will acknowledge how badly advisers have been treated

good on the advisers who have left, i am building up the courage to do so myself.

all you people are crazy posting comments here. I hope you did take the precaution (like me) of using someone else's computer to do it.

the ASIC Gestapo secretly trolling this site is going to get you

You only have to look back in history at ASIC's report into Life insurance that brought about the LIF to understand what crooks ASIC are. They targeted know churners with only 202 files reviewed, they admitted they got it wrong after the LIF was passed and since then the effects on customers has been catastrophic. Insurers have been increasing existing customers premiums time and time again. The same insurers discounting premiums on new business and trying to encourage churn and ASIC have done NOTHING about this. Underinsurance has worsened, new business has dried up and the fault lies with both ASIC and the FSC. The crooks are running the prison.

and the life insurers who complained are getting their due. all are loss-making and collapsing

I can't wait for the finger-pointing and blaming

Australians has lost so much from this RC and regulators. The legal fraternity made heir windfall....again. Regulators, misguided and seeking a purpose hardly know what each other are doing. I have a friend with a large collection of ASIC files they so carelessly dont clean out their cabinets prior to auctions of their furniture. Compliance and duty of care needs to come from ASIC within. A great industry has virtually been decimated. 31 years of service I did and no complaints, a whole lot of pro bono work and I am out of the stupidity now. Sad about that but I need my life.

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