- ASIC recently released CP 332 to further understand the current issues and impediments around delivering affordable, quality personal financial advice
- This consultation signals a critical milestone for our advocacy as unlike most consultations, ASIC is seeking input directly from members
- By using the collated handy support guide below, completion of your response can be quickened
Following our three-year advocacy effort to channel your feedback to government and regulators on the regulatory burdens in the financial advice industry, ASIC has extended the invitation to hear directly from you.
ASIC recently released Consultation Paper 332: 'Promoting access to affordable advice for consumers' to further understand the issues and impediments around delivering affordable, quality personal financial advice, particularly in relation to limited advice.
This consultation signals a critical milestone for our advocacy as unlike most consultations, ASIC is seeking input directly from members. To this end, CA ANZ offers members a handy support guide collated from feedback provided over the years. We have listened to you and following our numerous government submissions, meetings with Ministers and advocacy, here's your opportunity to provide your thoughts directly to ASIC, which we will also be doing.
The survey looks long but is divided into sections:
- For advisers
- For licensees and
- For other stakeholders
Completing your relevant section will only take 15 minutes and closes on 18 January 2021. We hope that by using the collated handy support guide, the process can be quickened as key messages can be cut and pasted into the survey. However, you are also welcome to prepare your own responses.
"The only way to drive change is to speak up – so we urge you to take the time to use your voice. Make sure it is heard – and loudly!"
Take the surveyComplete the survey
Questions about challenges and practical issues you face when providing limited advice
- Throughout the pandemic, our practice has played a key role in assisting individuals and small businesses with government stimulus measures and will continue to do so particularly for those businesses needing a turnaround strategy.
- However, without an AFSL, we are unable to discuss one of the most important issues clients want from us – single issue (limited) superannuation advice. If we provide advice via an AFSL – limited or full, the process for limited advice is complex, time-consuming and hence expensive, and as we are predominantly paid on a fee-for-service basis, clients don't want to pay big fees for work they believe we should be able to provide in the ordinary course of our business advice.
- When ASIC announced relief to allow tax agents to give advice without an AFSL and relief for all financial advisers to provide early access to super advice via a Record of Advice rather than a Statement of Advice, it acknowledge that a ready-made group of highly qualified professionals can help address this need. We strongly support this view and would like further relief to be provided.
- Be sure to highlight what your clients want. For example, clients want a one-stop shop for their COVID-19 financial recovery strategy and we want to be able to provide strategic advice for which we are highly qualified to do, without stepping into product advice which rightfully requires an Australian Financial Services Licence (AFSL).
Questions about ASIC guidance on limited advice
- The table below shows the most sought-after topic areas clients continually seek advice from us, which we believe should be allowed under a broadened scope outside of the AFSL regime, at least until a strategic model is developed.
|Contributions to that existing fund||Pensions from that existing fund||Appropriateness of establishment or wind-up of that fund|
(but not an SMSF)
|Yes||Yes||No, as this is product advice – should require an AFSL|
|SMSF||Yes||Yes||Yes, as this is a trust structure and structural advice should not require an AFSL|
- There is an urgency for this advice, and as we believe this single-issue, single topic advice should not require an AFSL, we seek interim relief for this advice until a strategic model to be able to provide more affordable advice is developed.
- As this relief is client driven and is a suggested interim solution to assist our clients immediately, we do not believe successful completion of the FASEA exam is necessary for advice of this nature to be provided.
- A model for the entire industry that delineates product advice from strategic recommendations should be developed. We don't believe highly qualified professionals who wish to solely provide strategic advice should necessarily fall under the FASEA umbrella, nor the rigours of the Corporations Act 2001. We do, however, support these regulations in more simplified for financial advisers who recommend products.
- Until a model for the entire industry is developed, we suggest this additional superannuation advice should, as a minimum, be able to be provided by 'recognised' accountants – those who are members of Chartered Accountants Australia and New Zealand, CPA Australia or the Institute of Public Accountants.
- We would also support this relief being extended to existing advisers on the Financial Adviser Register (FAR) if clients also need advice of this nature from qualified professionals who want to solely operate in this limited superannuation space.
Questions about terminology in RG 244
RG244 is an ASIC guide that explains the differences between giving factual information, general advice and personal advice, and how to meet the advice obligations in the Corporations Act 2001, including the best interests' duty and related obligations, when giving 'scaled' advice (i.e. personal advice that is limited in scope)
- While we thoroughly support ASIC's efforts to simplify this guidance, it is difficult to implement in practice due to the conflicts it has with FASEA's Code of Ethics. We would like to see these conflicts resolved before we believe this guidance can be fully implemented into practice.
Questions about ASIC guidance and examples on SOAs
- We also thoroughly support ASIC's efforts to simplify this guidance as, in many cases, the current SOA is too complex, too long-winded, is therefore expensive to produce and falls short of being client friendly.
- We would appreciate ASIC providing further guidance on simplified Record of Advice documentation for the additional relief of single-issue superannuation topics sought by CA ANZ members who are qualified to give superannuation advice.
Questions about affordability and availability of advice
- The enormous regulatory change over the past 25 years has meant that the cost of advice to Australians and businesses has become prohibitive so less consumers are accessing financial advice in circumstances when it is most needed and financial advisers and accountants are leaving the industry in droves (16% reduction in 2019, and a 21% annualised reduction in 2020).
- Australians need a permanent increase to the trusted pool of suitably qualified professionals to guide them along this COVID-19 road to recovery, to create jobs and drive prosperity.
- Many Australians have accessed their super in record amounts because of withdrawals during the pandemic and broadened access to advice will help them restore their super balances.
- A great deal of contribution and pension advice to existing clients in relation to existing superannuation funds is in the ordinary course of an accountants' business and should be able to be provided within consumer driven price ranges outlined in ASIC's Consultation Paper 332 (Page 20) as they equate to approximately an hour's work of a professional accountants' time.
- Single issue advice relating to the establishment or wind-up of an SMSF trust structure would most likely take longer but would still be able to be provided more affordably should the relief suggested above be implemented.
Questions about strategic advice
- A model needs to be built that allows for single topic, single issue advice to be provided through a simple advice document at an affordable price.
- Superannuation is the first area needing urgent single topic strategic reform. This can then be expanded to other areas such as insurance, investments, debt etc. over time.
- By advocating for the removal of multiple licences, registrations, regulators and associated levies, the cost of obtaining strategic financial advice will decrease for both advisers and their clients.
- The following qualities should provide clients with high quality affordable advice and by offering interim relief until a model is finalised and implemented will see more accountants continue to advise clients in these limited areas.
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