The Financial Advice Association Australia has recommended that ASIC offer principles-based regulatory guidance to a financial advice audience that is now relying on their own readings of ASIC’s regulatory guides.
ASIC released the Report 813 Regulatory Simplification in early September, claiming it had “slashed” 9240 pages of regulation since the beginning of the year and called for industry suggestions to enhance simplification.
The report outlined how ASIC intends to improve access to regulatory information and reduce complexity in regulatory instruments to make it easier to interact with ASIC, as well as potential areas of law reform.
The FAAA said its membership would also like the regulator to offer more educational services about its guidance and be more open to industry feedback.
The association argued that the post-Hayne royal commission shift that had seen more advisers become self-licensed meant regulatory guidance needed to be re-framed to help advisers who are increasingly relying on their own readings of ASIC’s guidance.
“This contrasts with current guidance which appears to be pitched at compliance experts, many of whom are or were employed by the larger licensees,” the FAAA submission, signed by policy general manager Phil Anderson says.
“Although small Australian Financial Services Licensees and self-licensed financial advisers often utilise external compliance services, not all do, and further enabling financial advisers to access and understand ASIC’s regulatory guidance will be in the best interests of the advice profession, ASIC and the community at large. It will result in improved compliance standards across the profession and reduce the cost of operating a financial advice business.”
The association called for the regulator to improve how it handles the breach reporting and fee consent regimes, as well as providing a clearer interpretation of the general advice guidance.
The association noted how the decision in the Westpac Securities Administration Ltd v ASIC High Court of Australia case had hampered how general advice is given.
The association also argued there was the opportunity to extend the usage of Records of Advice, even in advance of the replacement of Statements of Advice with Client Advice Records due to come into placeas part of the Delivering Better Financial Outcomes reforms.
The submission noted that ASIC sometimes takes an “inflexible approach” to regulatory requirements particularly when it comes to minor matters that cause no consumer detriment, which the association argued could be addressed by licensees without “harsh” penalties applied.
The association pointed to recent breach reporting requirements for a change to fee consent renewals as an example of this.
“We seek a more pragmatic approach from ASIC in the future with matters of this nature,” the submission said.
“ASIC needs to be conscious of the time and cost impost on business, which distracts them from their primary purpose of servicing the needs of their clients.”
