ASIC has released plans for publishing regulatory guidance on the impact of the Future of Financial Advice (FoFA) reforms on the financial planning industry.
Earlier this month, newly-appointed ASIC commissioner Peter Kell committed the regulator to supporting government and Bernie Ripoll, chairman of the Parliamentary Joint Committee on Corporations and Financial Services, who promised to outline the changes in “plain English”.
“The regulator has a big role to play in how any new policy is interpreted,” said Ripoll at the second Professional Planner Dealer Group Summit, which concluded last week.
“I think that it is normal and natural with any legislative change there will be a period of uncertainty. There is a clear role for ASIC to supply regulatory guidelines.”
Assuming the FoFA Bills are passed before 1 July 2012, ASIC aims to release regulatory guidance before 1 July 2012 on:
- The best interests duty: guidance will set out ASIC’s expectations for meeting the best interests duty;
- Scaled advice: ASIC issued Consultation Paper 164 Additional guidance about how to scale advice in July 2011. The final guidance will aim to increase access to advice by facilitating the provision of scaled advice where appropriate. This guidance will take into account the best interests duty and will discuss a range of topics, including how the fact find can be either limited or expanded, depending on the complexity of the advice being provided;
- Conflicted remuneration: guidance will assist industry to understand the practical operation of the ban on conflicted remuneration and how ASIC will administer it;
- ASIC powers: ASIC will re-issue Regulatory Guide 98 Licensing; Administrative action against financial services providers to reflect its expanded powers to cancel or suspend an AFS licence and ban representatives.
ASIC is also considering developing regulatory guidance on FoFA’s anti-avoidance provisions.
Kell added that this guidance was ASIC’s highest priority and committed the regulator to amending existing regulatory guidance to reflect the FoFA reforms where necessary.
The watchdog will consult directly with stakeholders in the coming months as well as seeking industry feedback through its usual formal consultation process.
“ASIC will also adopt a facilitative compliance approach for the first 12 months of the implementation of the FoFA reforms, until 1 July 2013,” the regulator said in a statement.
“That is, provided industry participants are making reasonable efforts to comply with the FoFA reforms, ASIC will adopt a measured approach where inadvertent breaches result from a misunderstanding of requirements or systems issues.
“However, where ASIC finds deliberate and systemic breaches we will take stronger regulatory action.”
The proposed commencement date of the FoFA reforms is 1 July 2012.
However, this depends on the timing of the passage of the Corporations Amendment (Future of Financial Advice) Bill 2011 and the Corporations Amendment (Further Future of Financial Advice Measures) Bill 2011 (the FoFA Bills) through Parliament.
