Time to speak up. Time to be heard.
Earlier this month, the Government released draft legislation detailing its responses to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The proposals, which are intended to be introduced into Parliament later this year, build on the Government’s 2019 Implementation Roadmap.
The challenge for many Licensees, and most advisers, is that the compressed timeframe provides little opportunity to review, consider and comment. As a consequence, institutional voices will tend to dominate and influence reforms in a direction that may only serve institutional interests.
We believe that our experience in supporting over 100 Australian Financial Services Licensees and over 1700 advisers equips us to advocate for your interests. Because we represent a number of small, medium and large independent licensees, we can offer a perspective that is too often drowned out by large institutions, product issuers and banks.
We are also well placed to provide Treasury with a practical perspective of the reforms and their issues, consequences and implications.
Our first two submissions, incorporating feedback from our clients, are attached.
“You know the good ole days weren’t
And tomorrow ain’t as bad as it seems”
— Billy Joel, “Keeping the faith”
Ongoing fee arrangements
Given the Royal Commission’s report, we all expected increased consumer protection provisions and enhanced disclosure requirements.
The draft legislation delivers both.
In addition to annual renewals and written consent, the legislation proposes enhanced fee disclosure statements that, like Janus, look both forwards and back.
We are slightly concerned about the failure to harmonise these changes with the FASEA Code and Standard but rather more alarmed by the proposal to apply criminal sanctions to a failure to keep adequate records.
read our sumbission on ongoing fees
We firmly believe that a consistent, predictable and active regulator is essential to an efficient and effective financial services industry, but we still have reservations about the proposal to expand ASIC’s power to give directions to Licensees in order to prevent or address breaches.
Quite apart from the fact that these enhanced powers were not recommended by Commissioner Hayne, these enhanced powers are particularly problematic given the absence of either ASIC’s increased transparency or increased oversight. If you combine lower thresholds for regulatory intervention with broad powers and a limited right of appeal, you have a solution that might be worse than the problem it solves.
Direction powers are fine, in principle, but they need to be more precisely defined and specifically addressed.
read our submission on asic powers
We don’t intend to make submissions on all the proposed measures, but we do intend to shortly address breach reporting and advice fees in superannuation.
If you’d like to participate in the submission process, by confidentially reviewing our drafts, reach out to us and we’ll add you to our Consultation Group.