ASIC Commissioner Danielle Press has reiterated the corporate regulator’s belief that scaled advice should play a crucial role in the industry, and questioned whether licensees and their compliance divisions playing it too safe is to the detriment of advisers and their clients.
Speaking on a panel at the Professional Planner Best Practice Forum Digital 2020 webinar event this morning, Press said it was hard to measure whether practitioners are being overly conservative when it comes to compliance around scaled advice.
“It’s definitely different from the base level of guidance that we give,” she said. “And licensees will make that decision based on their business offering.”
The Commissioner said ASIC needed to address the disparity between the compliance standards they set and the application of them by the advice community, which may involve changing “some of the settings”. If ASIC’s advice isn’t clear, she said, “then maybe we need to look at our guidance”.
Press did note, however, that there are plenty of licensees building entire business models around scaled advice, which ASIC “has no problem with”. Indeed, she said, scaled advice is a key part of the plan to make advice more affordable and accessible for consumers.
“It may come as a little bit of a surprise to you but actually that’s what we want as well,” she said.
Press expressed some disappointment at the licensee community, whose adoption of compliance relief offered by the regulator – assumedly the recent early release of super advice measures – has been limited.
“It does concern me a little,” she said, “when we say ‘here is some relief’, but some licensees say ‘that’s fine, we’re not taking that risk’.”
The regulator has come under fire recently for being disconnected from the real compliance burden advisers are facing, with ASIC’s retrospective ‘lookback’ program into past breaches reportedly precluding advisers from feeling comfortable with the current stated compliance boundaries.
“All that lookback stuff with ASIC has meant that advisers are looking over their shoulder,” said Story Wealth’s Anne Graham.
A similar line was taken by Press’s fellow panellist, Moran Partners director Paul Moran, who said advisers need to take a more conservative approach than indicated by ASIC to avoid complaints from a client that could escalate to the Australian Financial Complaints Authority.
“The conflicts occur because many of the standards that ASIC set don’t stand up in court,” Moran said. “[Advisers and licensees have] got to take a more conservative approach than just meeting what ASIC says is the required standard.”
Also on the panel, director of wealthadvice.com.au and chair of the Financial Planning Association, Marisa Broome, sympathised with compliance teams whose conservative stance is borne out of fear.
“Things like Reports 636 – which looked at the whole FDS issue and fee-for-no-service issue that was in place – and the AFCA 10 year ‘lookback’ has naturally led a lot of compliance people… to be incredibly conservative,” Broome said.
‘We’ve got to get over it’
Commissioner Press said she was “concerned” to read Professional Planner’s recent article citing advisers worry that their Statements of Advice met the regulatory standard, but were not compliant enough to satisfy legal teams.
“Well, it is the regulatory standard so it does meet the legal standard,” she said. “We’re not sure why that confusion exists, and we’re really keen to pursue that because I think we’ve got to get over it.”
As for licensees, she offered a theory as to why they may be wielding compliance at a higher level than required.
“I think some businesses and their compliance groups use the legislation to stop what they think are maybe less qualified advisers,” she said. “I don’t know, that seems to be my view, but at the end of the day the way they interpret the law and the risk is their choice.”