Will lawyers find themselves in the same regulatory boat as advisers?

18 June 2020

The Australian Securities and Investments Commission (ASIC) has signalled that lawyers involved in future class action arrangements may find themselves subject to many of the same rules and obligations as financial planners.

In a submission filed with the Joint Parliamentary Committee on Corporations and Financial Services inquiry into litigation funding and the class action industry, ASIC said that lawyers were likely to find themselves in the realm of providing financial product advice if they were “distributing” litigation fund arrangements.

The ASIC submission has looked at the implications of litigation funders being required to hold an Australian financial services (AFS) license and for class action schemes to be regarded as a Managed Investment Scheme (MIS).

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“The advice regime may apply to those ‘distributing’ the litigation fund arrangements, such as lawyers, if they provide advice in relation to the registered scheme,” the submission said.

“A person must hold an AFS licence to provide financial product advice in relation to a registered scheme. Financial product advice is a recommendation or a statement of opinion, or a report of either of those things, that is intended to, or can reasonably be regarded as being intended to, influence a client in making a decision about a particular financial product or class of financial product (or an interest in either of these)”.

The submission said that “financial product advice will generally involve a qualitative judgement, evaluation, assessment or comparison of the features of one or more financial product(s)”.

The submission noted that lawyers might be able to avoid being caught in the advice regime if their advice was deemed to be about matters of law and legal interpretation and the provision of legal services in the ordinary course of their activities.

However it said that if financial services in relation to litigation funding schemes were no longer an exempt financial service, “the role of a lawyer (e.g. advising clients about participation in a specific litigation funding scheme or comparing different schemes) is an issue that requires further consideration having regard to the obligations that lawyers have relating to conflicts of interest (e.g. lawyers are subject to ethical duties to the court, statutory duties under state or territory legal profession Acts, and professional codes of conduct and practice rules)”.

“Lawyers are also subject to fiduciary duties to their clients,” it said.




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maybe there is just in the world...though i dont really see it getting over the line. Not media push.

Well, 'regulatory boat' is a curious turn of phrase isn't it? Conjures up all sorts of dramatic visions about life on the high seas - which is what it feels like right now for many Advisers like me.
The answer to the question is no anyway.
The way the financial services laws are currently, no 'lawyers' - that I know of - are currently licensed (that is, on the FAR) and they can't become licensed except through the Provisional Relevant Provider process which includes PY & the FASEA exam et al.
So when and if firms start applying for an AFSL then they might be ok with the Responsible Manager rules under RG105, but who will they nominate as a Representative? Lawyers give legal advice of course not financial product advice (lucky them).
So licensing for Class Actions is a poorly thought out idea to begin with given the Regulatory framework - unless lawyers get regulatory relief which is pretty dangerous IMHO. Nice idea but dumb proposal.

Effectively, Haynes RC influence over adviser legislation means that he is wanting to impose a one-off lawyer retainer style fee approach to retailer adviser remuneration. But he's not wanting to impose that one-off remuneration system on fund managers, administrators or intrafund personal advisers. So much for "informed consent" from clients, on what they might be happy with.

Kenneth Hayne just did what the banks told him to do.

There needs to be a royal commission into him and the secret payouts he is getting from his masters at the big 4

Haynes eagerly did what the Union Super funds told him to do. He is a left wing socialist through & through. To say he did what the Banks wanted was laughable, if not unhinged.

What about making them adhere to Best Interests Duty. Oh thats right, it would be impossible for them to trade (as they only care about themselves) and Maurice Blackburn and Slater and Gordon would have to shut their doors.

Maybe we could make them do an ethics exam, because as we all know, passing an ethics exam will change a persons character and make unethical people ethical.

I think all professions, such as accounting and law should have the same scrutiny as financial planners. Otherwise there is double standard.

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