Deborah KoromilasThe Australian Securities and Investments Commission (ASIC) “quality advice” project is not designed to impose new or higher standards on financial planners than already exist in law, according to ASIC’s senior executive leader, financial advisers, Deborah Koromilas.

Koromilas is leading the quality advice project, which aims to come up with a definition of what constitutes quality advice and to produce a range of “tools” to enable financial planning firms to embed in their businesses the processes necessary to produce consistently high-quality advice.

The project will be supplemented by ASIC’s periodic “shadow shopping” exercises, to track how advice improves over time, gauged against the definition developed by ASIC. However, that definition will have its roots in existing legislative requirements.

Koromilas told the IFSA conference that the project’s aim is to help all financial planning firms meet the standards of advice and practice already demanded of them in law. She said it is not a project designed to impose “best advice” practice on all financial planners – but if individual firms or planners want to aim for best practice then ASIC has no objection.

“Our role is not to step beyond the legislation,” Koromilas said.

“The legislation sets a standard for the giving of advice. This project is not about trying to push it beyond that; and that is not the role of the regulator.

Koromilas said if financial planners meet the standards required by law, “it’s going to create a quality outcome for your clients”.

“As a regulator, we do see the value in quality advice,” she said.

“It’s important for us that there’s some consistency around how advice is delivered. That does not mean we are looking for people to be carbon copies; but it’s our role to be out there giving guidance, where guidance is needed.”

Koromilas said that some perceive the quality advice project as “overkill by the regulator…but that’s not it at all”.

“There’s a real need out there from the industry itself – there’s not necessarily a good understanding of what ‘quality advice’ means,” she said.

“If you are out there to give advice, what is it you should be doing?”

Meanwhile, two visiting experts have said their respective home markets could learn more from Australia about how to structure and regulate a financial advice industry than Australia could lean from either of theirs.

Brian Reid, chief economist for the Investment Company Institute (ICI) in the US, said the US advice industry is complicated, and really not well understood by the average consumer of mutual fund products.

“In many ways, it’s an advice model that is under a great deal of development and change,” Reid said.

“Most advice is given under an asset-based fee that’s external from the mutual fund itself. That’s led to a re-examination of the set of rules of conduct that advisers and brokers have to abide by.”

Richard Saunders, chief executive of the UK’s Investment Management Association (IMA) said the UK – and Europe – had tried on many occasions in the past to come up with a regulatory structure that works.

“Now we are on to the latest iteration, which is called the Retail Distribution Review,” Saunders said.

“What it’s trying to do is move towards a more professional distribution system in the UK. We have a partially professional distribution system in the UK now, [but one] which has vestiges of it that have descended from life insurance, where some of the old practices prevail.”

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