A record level of interest in how financial advisers can provide limited and affordable advice will direct the future actions of the Australian Securities and Investments Commission (ASIC), which has already identified ways in which it can assist the advice sector.
The corporate regulator stated it had received a very high number of submissions in response to Consultation Paper (CP) 332, which it released in November 2020, from across the financial advice spectrum.
“The response to CP 332 was unprecedented, with ASIC receiving 466 submissions from financial advisers, licensees, industry associations and relevant stakeholders,” ASIC said.
Specifically, 242 financial advisers and 40 licensees made a submission, while another 68 submissions were received from advisers who were also licensees.
A further 111 submissions were received from other industry stakeholders, including 45 accountants, 16 industry associations, six super funds, two risk insurers, two consumer groups, two academics and six legal firms/lawyers.
A summary of the feedback, released by ASIC, found the main barriers to providing limited advice were that it remained too costly to provide, the regulatory requirements for comprehensive and limited advice remain the same and whether it meets the Financial Adviser Standards and Ethics Authority (FASEA) Code of Ethics.
Key issues related to the cost of advice were identified as statement of advice preparation and rising regulatory and governance costs, as well as licensee policies and procedures that require a level of compliance above what is required by law.
Complexity and conflict also marked respondents’ views of ASIC guidance, specifically “Regulatory Guide 244 Giving information, general advice and scaled advice”, which was deemed to be too long, at odds with the FASEA code and restricted in use by licensees.
ASIC said it held roundtables in April with advisers, licensees and industry associations to discuss the key issues raised in the submissions.
“Based on the feedback provided in the submissions to CP 332 and the roundtable discussions, ASIC has identified a number of initiatives that may assist industry participants in providing good-quality, affordable personal advice to consumers,” it said.
The regulator did not provide details of any steps it might take, but added “ASIC intends to move forward with these initiatives as resources permit” and will pass on issues relating to law reform to Treasury for consideration as part of its Quality of Advice review.
