ASIC Commissioner Danielle Press and Liberal MP Bert van Manen

Advisers could be given more leeway to use Records of Advice (RoAs) after ASIC revealed its high-level takeaways from submissions made to its landmark consultation (CP 322) on access to affordable advice.

While ASIC hasn’t yet published the 469 submissions to the consultation, it has provided a “high level” briefing to industry associations and Treasury which was published Monday after being requested by Liberal MP Bert van Manen during a March 19 PJC hearing.

The most significant takeaway ASIC identified across the submissions was that advisers want to use more RoAs, yet remain constrained by licensee and regulatory restrictions.

“SOAs are a clear cost barrier to providing limited advice,” ASIC stated in its takeaway document. “Respondents have raised that Government should reconsider the SoA requirements and expand the situations when an RoA is permissible instead of an SoA.”

As well as providing further guidance on RoAs to advisers, ASIC said it was considering “possible relief to extend the situations where an RoA can be used, for example when providing limited advice or strategic advice”.

ASIC first indicated its intention to provide regulatory relief via an expanded RoA regime during the early days of the pandemic, when it allowed advisers to give advice on the early access to superannuation scheme under an RoA.

The regulator is now set to both increase the quantum of scenarios whereby RoAs can be used, as well as provide further guidance on existing scenarios.

“Respondents want more guidance on providing RoAs and have generally submitted they would like to see ASIC promote its use,” the regulator noted.

‘Turgid’ guidance

Continuing ASIC’s new self-reflective tone and its willingness to consult with industry, Commissioner Danielle Press revealed the regulator is aware that it’s guidance is often too complicated and unwieldy.

“We’ve identified a number of problems, particularly in the way our guidance is structured and set,” Press told Van Manen during the March hearing.

“We think there are some solutions to them, but we would like to talk to the industry about whether that is helpful or not,” the Commissioner continued. “There is a lot of guidance that is quite complex, long and turgid in this industry.”

ASIC is considering shorter examples, shorter guidance and the use of podcasts and video rather than compliance teams to explain regulation to advisers, Press explained. “We think that’s a really important shift in the way we’re thinking about the way we’re regulating the industry.”

The response from industry to the consultation played a key part in this development; respondents said Regulatory Guide 244 on limited advice was “difficult for users to understand”, ASIC noted, while RG 90 on SoAs was “not sufficiently helpful”.

Licensees’ second warning

Among the other observations noted by ASIC was that overly conservative licensees continue to put up barriers to limited and strategic-only advice, a problem Press also highlighted at the Professional Planner Best Practice Forum in August 2020.

While acknowledging this was a business decision, ASIC said it intended to address the issue with licensees.

ASIC also reported the majority of respondents to the consultation were content to use the term ‘limited’, rather than ‘scaled’ or ‘episodic’ advice.

Several policy issues were raised during the consultation that ASIC said it would pass onto government, including a complaint that the FASEA Code of Ethics precludes limited advice.

Another key finding was the reluctance of advisers to embrace digital advice. “There is very little appetite for digital advice among existing advisers,” ASIC stated, adding that advisers did see potential for technology supporting the advice process.

Outsized adviser contribution

Of the 469 submissions to the consultation ASIC reported 244 came from financial advisers, 72 from respondents who were both an adviser and a licensee, 43 from licensees, 17 from industry associations, eight from super funds, two from insurers and two from academics.

The large adviser cohort made a combined plea for the regulator to “talk directly to advisers, not just licensees, professional associations and lobbyists”.

Further, respondents said ASIC should “consumer test” guidance to make sure that it’s “understood and useful”.

The volume of responses seems to have pushed back the consultation process timeline; while ASIC’s website says the industry roundtables to discuss the submissions would take place in Q1, it’s understood these are scheduled to take place next week.

ASIC is expected to release a short update focussing on key issues shortly thereafter.

4 comments on “More RoAs, less ‘turgid’ guides: ASIC reveals advice consultation takeaways”
  1. Avatar
    Jeremy Wright

    The people who seem to be forgotten in all this, are the recipients of the advise.
    Australians are intimidated and do not read SOA’s, due to the fact they cannot understand them.
    ASIC are starting to realise that there is a problem, though are so confused by the maze of Regulation and how it can be best interpreted so Australians can actually understand what is placed in front of them, that they are now reaching out to others for a remedy.
    Unfortunately, this will become further bogged down while more Lawyers and Auditors interpret Legal wording and the merry go-round will continue while thousands more advisers walk away due to the snail pace of much needed reform.
    An SOA is a very complex legal document for what in many cases, is simple advice.
    An ROA is a cut down version and is much easier to produce and is more cost effective.
    ASIC providing temporary relief, is not a recognition of the endemic problems that currently exist within the Life Insurance Frame work and unworkable FASEA requirements that any sensible person can see are a severe restriction of trade and if tested in Court, could also be shown to be Collusion with the vested interest Education Industry groups that show NO INTEREST in doing the right thing.
    ASIC will never be able to fix the issues on their own and the Licensees are too scared to criticise ASIC or make demands.
    Lawyers and Auditors will resist any changes that can impact on their revenue streams, which leaves Advice practices who are at the coal face and clients as the only people who should be involved in how to structure the future framework.
    One more thing. Australia does not have 2 years to start sorting this out.
    Within months there will be a mass exodus of advisers unless the FASEA December deadline is extended to give the Regulators and the Government more time to properly structure ongoing education requirements, that will take into account experience, complaints and claims history etc and to finally direct appropriate Education to the appropriate areas.
    Advisers need to see that the SOA / ROA / FASEA impediments to remaining in the Industry, are being taken seriously.
    It is not about immediately fixing the mess, that is impossible with all the current vested interest groups lobbying and pushing their own agendas. It is about providing breathing space so Advisers can see some light at the end of a very long and dark tunnel.

  2. Avatar

    I’m one of the 244 advisers who made submissions. The key point I wanted to convey was that by consulting with industry on this, ASIC is repeating the mistakes of the past. It sounds credible, but inevitably fails when, after yet another round of consultation, ASIC retreats to their offices and fills the seats at the decision-making table with bureaucrats. We need professional expertise at the decision-making table – the same as the established professions have. That is how they manage to function effectively. The problems will not be resolved until we are a genuine profession and afforded the liberties that facilitate the functions of professions – with skilled, professional experts replacing bureaucrats as the decision-makers.
    To ASIC’s discredit, they clearly have no intention of facilitating that change. In my view, for the benefit of consumers of financial services in Australia, change is going to have to be imposed on ASIC.

  3. Avatar
    Wayne Leggett

    While it’s encouraging that ASIC is acknowledging the problem, until they give clear and concise guidance on when SoAs are necessary and confirm RoAs are appropriate in all other situations, licensees will continue to err on the side of caution and insist their ARs continue to issue SoAs in any situation where doubt exists.

  4. Avatar
    Michael Gershkov

    Great article! The solution to all this is so simple – ASIC staff must be required to have an adviser and pay for this advice with their own money. Until they do, they will never really understand what an adviser does. Politicians need to do the same given they are the ones who ultimately stop ASIC from being helpful as a supportive regulator and have turned them into what they have now become – an enforcer of what does not work. Adviser want to help people and give advice but they have to be able to do it and earn a living without the insane risk that doing what works will result in legal and financial liability. That is why most licensees are limiting what advisers can do, not out of benefits for clients or opportunity for advisers but out of fear which is not productive for anyone.

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