Financial Planning, Regulation

AFA questions disciplinary body remit

AFA disciplinary body

AFA has recommended the new Single Disciplinary Body not review administrative and minor matter to avoid cost blow outs in adviser regulation.

The Association of Financial Advisers (AFA) has expressed concern about the remit of the proposed single disciplinary body (SDB) and that an unnecessary focus on minor matters will lead to a blowout in costs to advisers.

The AFA noted the exposure draft legislation to create the body indicates it would be able to examine breaches of the law and the Financial Adviser Standards and Ethics Authority standards and Code of Ethics, but lacked clarity on what penalties may apply in those cases.

“Consistent with our earlier statements about the new breach reporting regime, we are particularly concerned about the fact that the exposure draft will see the SDB looking at some of the most minor and administrative matters,” the association stated.

“This will mean that the SDB will be looking at a large number of matters, most of which are minor or administrative, like inadequate record-keeping on compliance with the best interests duty safe harbour steps or errors or delays in the provision of fee disclosure statements.”

It added it remained concerned about the cost of running the body in light of recent large-scale increases in the Australian Securities and Investments Commission funding levy, which is charged to advice licensees and practitioners.

In a note to members, the AFA said that in a submission to Treasury in mid-May in regards to the exposure draft legislation, it had recommended minor and administrative matters should not be reported to the body, greater clarity was needed on the penalties that might apply and there should be no separate education and training standard for tax (financial) advisers.

The proposed body is an outcome of recommendation 2.10 from the financial services royal commission and would use the existing Financial Services and Credit Panel (FSCP) inside ASIC to consider matters and replace FASEA from the end of 2021

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