The Stockbrokers and Financial Advisers Association (SAFAA) has welcomed the announcement from the Australian Securities and Investments Commission (ASIC) regarding its “reasonable approach” to the early stage of the regulatory reforms, coming into effect in October 2021.
ASIC said it recognised the changes were significant and there would be a period of transition as the industry finalises implementation of compliance measures.
SAFAA chief executive, Judith Fox, said the association had been warning about the impact of “this regulatory blizzard for some time”.
“We are particularly pleased that ASIC acknowledges the regulatory reforms require significant change to business systems and processes and take effect at the same time industry is facing other challenges including those resulting from COVID-19 and renewed lockdowns,” she said.
"Our member firms have had to implement significant system changes to accommodate these reforms, which in turn have raised questions of resource constraints.”
Fox said that firms had reached limits to their capacity to expand their technology teams, both financial and human resource-related, while the supply of experts in information technology had been impacted by border closures arising from COVID-19.
“Our members are doing all they can to prepare for these changes but the impact of lockdowns on their capacity to meet these legislative deadlines is weighing heavily on them,” she said.
The new laws would include design and distribution obligations (DDO), restrictions on the unsolicited selling of financial products (hawking), a deferred sales model for add-on insurance products, reference checking and information sharing requirements for financial advisers and brokers, and new requirements around how breaches were reported to ASIC and disputes were managed internally in firms.