Financial planning licensees face finding themselves swamped by increased breach reporting requirements under legislative changes being pursued by the Federal Government.
The increased breach reporting obligations will flow from legislative changes which elevate the status of single breaches and extend what represents a reportable breach.
This represents a significant departure from current practice where licensees would need to have detected a number of shortcomings during an adviser audit before concluding that a significant breach had occurred worthy of reporting to the Australian Securities and Investments Commission (ASIC).
Association of Financial Advisers (AFA) general manager, Policy and Professionalism, Phil Anderson said he was significantly concerned about the implications of the changes within the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 which he believed would result in a significant increase in reportable breaches.
He said that primary was the level of work that the current arrangements would inflict on licensees in the absence of the Government providing a meaningful regulatory approach.
“This represents a challenge for licensees but a boon for lawyers and compliance consultants,” Anderson said.
“At present, the conventional approach to significant breach reporting for financial advice is that an issue would need to be evident in multiple cases before it was reported to ASIC,” he said. “So, for example, with advice that is assessed as having failed the best interests duty, there might need to be three or four cases as part of an adviser audit before it was assessed as a significant breach.”
“Where there are issues with fee disclosure statement (FDS) non-compliance, it would need to be more systemic before it was reported.”
However, Anderson said that under the legislation as it currently stands, it would be a matter of reporting any and every breach of the civil penalty provisions.
Comments
Pollies & ASIC say they want to Reduce Red Tape Compliance Cost = More and More BS REGS and RedTape at every turn.
Lies, lies utter lies.
REGULATION STRANGULATION !!!!!!
They said the Witch trials in Salem circa 1690 were bad...
Looks like ASIC is suggesting that remediation ie look back 2.0
"“We are proposing that a remediation must be initiated when a licensee has engaged in a misconduct, error or compliance failure relating to a financial service provided by and covered under the licensee’s relevant licence and caused actual or potential consumer loss to ‘one or more’ consumers, rather than a ‘number of consumers’.”
Therefore, ASIC will be on use for the slightest typo.
Everyone may as well resign or hand in their AR because NO ONE is perfect. This will be an absolute dogs breakfast and create mental health issues like we haven't seen before in the industry as everyone is reported to ASIC. He who casts the first stone..
No, there is an expectation we must be perfect.
If we are not perfect on every detail, on every requirement, on every single issue , on every single document, on every single conversation we have with clients, on every single day of every single week of every single year , we will be punished.
The subjective nature of best interest duty, allows for an open slather attack on advice.
The word " best " allows an endless scope of subjective attack to be delivered if necessary.
Who determines the parameters of " best ".......is it a disinterested person, walking down the street ??
The Best Interest Duty should be changed to Client Interest Duty whereby you are still required to act in the client's interest and not your own.
If anyone doesn't believe we are the fish in the barrel and ASIC have the loaded gun, then they are delusional.
It's the killing season.
This will make it almost impossible to sell a business, as any business will have some issue and Licensee's won't want to take on any risk. This has really killed my retirement plan. My practice will have no value. Thanks Scomo and Josh for killing another industry. You would have to be the worst leaders we have ever had for small business.
No no, remember, the Liberal Party is the party for small business as Malcolm (Malcolm In The Middle) Turnbull claimed over and over and over to the point of glazing over.
The Liberal Party have done nothing for financial services small business other than destroy them.
I believe that Josh Frydenberg has an inherent issue with financial advisers and has no capacity for listening to the pain and impact that has been forced upon them.
I don't think Josh is a friend of our industry whatsoever and I don't think Scott Morrison gives two hoots about financial services at all.
Add new comment