Handing the Australian Securities and Investments Commission (ASIC) product intervention powers could end up restricting advisers as a result of licensees limiting the number of offerings on approved product lists (APLs), according to the Association of Financial Advisers (AFA).
In a submission filed with the Treasury this month, the AFA said it was concerned that the impact of this legislation would be a reduction in the breadth of APLs as licensees sought to avoid the unnecessary complexity that would arise in having a broad APL and where an adviser might want to recommend a non-approved product.
“The impact of this is a reduction in competition and choice for consumers,” it said.
The AFA also expressed concern about the manner in which the proposed product intervention power would impact the cost of providing financial advice, particularly where record-keeping and other administrative obligations were concerned.
“We note that the Regulatory Impact statement demonstrates a cost to business of $94.7 million, which is a significant reduction on the $239 million set out in the December 2017 version,” the submission said.
“We remain disappointed that there is a total lack of detail in terms of the breakdown of this $94.7 million and we are concerned that the majority of it will sit with distributors and financial advisers in particular,” it said.
The AFA said the cost increase from the legislation would come on top of a number of other recent regulatory-driven increases which would impact upon the cost of providing financial advice to Australian consumers and would therefore negatively influence access to financial advice for average Australians.