Advisers need to avoid regulator 'radar'

Advisers need to make sure their new regulatory requirements are all in place to avoid being on the regulator’s “radar”, according to risk and compliance firm Assured Support.

Speaking on an Association of Financial Advisers (AFA) webinar, Sean Graham, Assured Support managing director, said there was range of ways advisers could get on the regulator’s radar and advisers needed to manage their regulatory risk.

“You can’t control every aspect of the compliance process, that’s going to rest with your licensee,” Graham said.

Related News:

“But what it does mean, if you’re an adviser and an authorised representative of a licensee, you have to understand how this works from day one because of the consequences of getting it wrong.”

Graham said advisers and licensees could not just “wait and see what happens” because of the way all the new regulatory changes came together.

“Every adviser knows 1 October there’s a new breach regime and reference checking system, on 5 October complaints comes in and design and distribution obligations (DDO) come in as well,” Graham said.

“The way these four regulations work together is they create mandatory reporting to the regulator, in terms of DDO, in terms of breaches, complaints and reference checking.

“At every mandatory report, the adviser or the authorised representative is identified as well; like it or not, we’re in a regime where the regulator is going to be getting a lot more data about us now.”

Graham said it was important to be aware of breaches or contraventions of the law that were deemed significant and needed to be reported to the regulator.

“One of those breaches that are deemed significant are failures of core licensee obligations and one of those obligations is to have an effective complaints internal dispute resolution (IDR) system,” Graham said.

“If you don’t have an effective IDR system from 1 October, that’s an issue that can be deemed a significant breach.

“The first enforceable rule under RG 271 says that in order for your IDR arrangements to be adequate, you have to have a dispute resolution system that meets the Australian Securities and Investments Commission’s (ASIC’s) standards and requirements.

“Even if you don’t get a lot of complaints – even if you’ve never received a complaint – you still have to have your arrangements in place by 1 October.”

Financial advice only made up a fraction of the total complaints received by the Australian Financial Complaints Authority (AFCA).

“Based on AFCA data, only 1.4% of complaints last year were about financial advice, the vast majority were about insurers and [product] manufacturers, and whatever else,” Graham said.

“It seems a bit of a disconnect these types of requirements are being pushed out to licensees and advisers when they’re not necessarily represented in the data.

“It’s a legacy issue, we went through a Royal Commission where a lot was flagged but those issues were institutional/structural issues which are no longer here.

“We are in some respects over-regulated, there is a level of regulation driven by past failures which have already been addressed.”




Recommended for you

Author

Comments

Comments

The compliance and regulatory framework are not created to be able to comply with. It is specifically designed to ensure no one can comply fully and therefore find more excuses to regulate even further. It is insidious, invidious and ubiquitous.

You are right unfortunately. This is what it has come to. We are now sitting ducks. ASIC can ban anyone they want and class action lawyers will eventually sweep in and bankrupt the lot of us unless there is a dramatic reversal of a number of areas, especially the FASEA Code

Seems to be the situation. Appears Treasury and ASIC have spent many many hours designing this trap - elimination of all Industry Super competition?

YOU ARE SPOT ON ! THE MISSION HAS ALWAYS BEEN FOR THE INDUSTRY SUPER FUND PONZI SCHEME TO HAVE IT ALL

I think the smart career move here is to go work for ASIC!

Rules created by lawyers, that create more work for lawyers to interpret and build additional layers of compliance, which still allow other lawyers to win cases against advisers. All coming from the royal commission, that was, yes that's right, run by lawyers. Tell me again it is the financial planning profession that is the problem.

Four more badly designed regulatory tools that licensees can weaponise to coerce advisers into recommending more of the licensee's inhouse product. How is this possibly good for consumers??

Australian consumers have been badly let down by regulators and so called "consumer associations".

Anyone interested in starting a Prison gang? It's inevitable we are all going to end up in prison for minor compliance breaches.

ASIC is corrupt.

They have a vendetta against us, and are philosophically aligned with the union industry funds. In both of their worlds, they view it would be cleaner and more beneficial to not have the pesky vermin called planners scurrying around and dirtying up their landscape.

Unfortunately they are also not accountable to anyone. Only people like Tim Wilson and the other LNP pollie Slade (name?) have been even attempting to put any spotlight or heat on them. Otherwise, we're f _ _ ked.

Despite what the idiots at AIOFP etc say, Labor is not our friend and would be worse than a disjointed LNP on this. They'd be very specifically focused and unified on finalising our services & careers.

Add new comment