Presidio's Jason Cook and Anne Graham from Story Wealth

Recent efforts from the regulator to ease the compliance burden are being met with scepticism from advisers, who say the continuation of ‘lookback’ compliance requests is precluding advisers from writing the shorter, simpler statements of advice ASIC is touting.

Earlier this week Professional Planner reported on ASIC Commissioner Danielle Press’s comments at the Parliamentary Joint Committee’s hearing into ASIC oversight, where she revealed the regulator was consulting with the industry on a project to lower the cost of advice delivery.

Press said that understanding the impediments advisers face in providing scalable and affordable advice is “probably the most critical thing” ASIC is doing in advice right now.

Many believe that while ASIC’s intention might be well placed, its promise to reduce the cost of advice doesn’t gel with the ongoing ‘lookback’ program, which involves auditing licensees for advice files up to ten years old.

“All that lookback stuff with ASIC has meant that advisers are looking over their shoulder,” says Story Wealth’s Anne Graham.

While broadly supportive of ASIC, Graham believes talk about reducing the cost of advice doesn’t hold water when ASIC’s regulatory process involves systematically raking advisers over the coals. Advisers won’t make their SOAs shorter and simpler when they are terrified of being investigated, she explains, so the cost to serve is going nowhere.

“The expensive part is documenting and creating file notes, you need to leave the breadcrumbs,” she says. “You probably do it in the extreme because if you can’t prove it, it never happened.”

According to Presidio Group principal adviser Jason Cook, there’s “a lot of fear” in advice.

“A lot of my peers are living in fear of the implications of these lookbacks, particularly those from larger licensees,” he says.

Cook says his firm recently had to increase their price 15 per cent “across the board” to accommodate bloated compliance costs, which not all their clients stuck around for. “We’re just going to have less clients and the clients we have will be charged more,’ he says.

The compliance issue extends beyond the Corporations Act, he believes, with FASEA’s Code of Ethics also bringing several grey areas into play that make it hard for advisers to provide compliant scaled advice. “My experience is that it’s next to impossible,” he says.

The Fold Legal’s Katie Johnston

More lookbacks, more fear

According to Katie Johnston, a solicitor at The Fold Legal, ASIC’s lookback activity is still causing shockwaves and prohibiting advice in a number of ways.

“The ‘lookback’ is definitely top of mind for people purchasing businesses,” she says, adding that the number of lookback requests “seems to be increasing”.