Smarter compliance. Welcome to the April 2019 update. We have big news. The financial service industry is highly regulated and surprisingly dynamic. Thankfully, the team behind our industry-leading compliance platform ensures openAFSL evolves even quicker. Regulators know that there’s a serious gap between what the law requires and what most Licensees manage to do - openAFSL helps you bridge that gap at a reasonable cost.
Smarter Compliance. In the current environment of declining margins, increased scrutiny and looming transformational change, it’s sometimes challenging to maintain enthusiasm and momentum. The key to both is being properly prepared. In a changing and complex environment, the secret to success is assured support. In this article, we offer you three resources that provide three compelling reasons to review, refine and improve your compliance arrangements. Take the opportunity now. If you need help, reach out.
Smarter Compliance. In a previous article we discussed Continuing Professional Development requirements under the Financial Adviser Standards and Ethics Authority (FASEA). In this article, we’re focusing on qualifications and, in particular, the completion of a bachelor or higher degree, or equivalent qualification, approved by the standards body. FASEA’s requirements appear deceptively simple, but the path to compliance with their requirements can conceal dead-ends, reversals and unanticipated complexity. Assured Support can guide you through.
Smarter Compliance. On 22 February 2019, Treasury released exposure draft legislation titled Treasury Laws Amendment (Ending Grandfathered Conflicted Remuneration) Bill 2019 which, if ever introduced, passed and enacted, will prohibit the payment to financial advisers of grandfathering conflicted remuneration. These amendments could have a significant effect on the advice industry. However, there’s still time for consultation, so this article summarises the key issues and the challenges posed by the proposed regulations. It’s no substitute for specific legal advice, but it’s considerably cheaper and more accessible.
Smarter Compliance. 2019 is shaping up to be a great year for financial services lawyers, business brokers and stress counsellors. Advisers have long accepted that the financial services industry is highly regulated and frequently changing, but the sheer scale and speed of reforms planned for 2019 is potentially overwhelming. We can’t do much about the rate of change, but we can alert you to the recently released Consumer Data Right rules, warn you about proposed changes to the Privacy Act to better protect (vulnerable) consumers and prepare you for the impact of new Design and Distribution obligations.
Smarter Compliance. In March 2019, ASIC released Report 614 titled “Financial advice: Mind the gap” summarising their research into consumer understanding of the differences between general and personal advice. No responsible licensee would be surprised to learn that ASIC’s research identified “substantial gaps in consumer comprehension”. These weren’t the only gaps that concerned ASIC and this article also considers ASIC’s response to AMP Financial Planning and SMSF Advisers Network.
Smarter Compliance. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry may not have delivered Bankers in handcuffs but its legacy is likely to be more profound. The criticism ASIC attracted for embracing deference over deterrence and their timidity and ineffectiveness was painful for those of us that value compliance, obey the law and recognise the need for a fearless, effective and consistent regulator. ASIC endured the public criticism and have emerged with a renewed vigour and with the people, powers and purpose they need to restore confidence and deter misconduct. This article addresses the relevant changes and their implications. We also offer seven immediate priorities for Licensees looking down the barrel of these changes.
Smarter Compliance. The new Continuing Professional Development (CPD) Standards released by the Financial Adviser Standards and Ethics Authority, provide useful guidelines for transforming the profession. Unfortunately, depending on your perspective, they were delivered either too late or too early for most licensees. One could complain, but, when you’re in mid-flight, your only real option is to adapt to the conditions and do everything you can to ensure you stick the landing. Sure, the flight metaphor is overworked but the article quotes David Bowie and is packed with the analysis and insights you need to operationalise these requirements. Hurry, 31 March 2019 will be here before you know it.
Smarter Compliance. Last month, the finalists for the 2019 Fintech Business Awards were revealed by Momentum Media, the publisher of Fintech Business. Assured Support was thrilled to be named as a finalist in two categories ("Compliance Innovator of the Year" and "Software Innovator of the Year"). We’ve simply been too busy delivering innovative compliance solutions to acknowledge the honour, but we appreciate that usefulness and effectiveness can sometimes offset the lack of a sales and marketing team. It's a strong field and one that shows the depth and quality of Australian FinTech Industry.
Smarter Compliance. It may be tempting for some Licensees to dismiss Fee-for-No-Service (FFNS) issues as problems for institutional businesses alone. The reality is quite different. Any business that receives fees or payments for ongoing service has an obligation to provide those services. This article outlines five (5) steps every Licensee should contemplate to identify and address any FFNS issues in their business.
Smarter Compliance. Since 23 February 2018, entities subject to the Privacy Act have had a legal obligation to record, manage and report ‘eligible data breaches’. If you were subject to the Australian Privacy Principles, you’re required to report data breaches but some Licensees may still be unfamiliar with their obligations. This post addresses the requirements, makes recommendations and provides some additional reading on data breaches.
Smarter Compliance. The elegance employed when drafting Regulatory Guide 146 Licensing: Training of Financial ProductAdvice and the flexibility afforded to Licensees by s 912a(1)(f) is too frequently ignored. This article explores the reasons why too many licensees never recognise the commercial and compliance opportunity presented to them by RG146 and looks at why that’s the case.
Smarter Compliance. In their February 2019 Update, ASIC noted that “There are 12 recommendations that are directed at ASIC, or where the Government’s response requires action now by ASIC, without the need for legislative change. ASIC is committed to fully implementing each of these,” This article provides a high level view of the recommendations and ASIC’s responses.
Smarter Compliance. The Senate recently passed the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Bill 2018. It amends the Corporations Act 2001, Australian Securities and Investments Commission Act 2001, National Consumer Credit Protection Act 2009 and Insurance Contracts Act 1984 and introduces a stronger penalty framework for corporate and financial sector misconduct.
Smarter Compliance. You may be aware, and the Royal Commission confirmed, that some Institutional Licensees appointed advisers that a more prudent Licensee would not have appointed. The difficulty, we were told, was that before the ABA published their 2018 protocols, there was no agreed process for reference checking. This post doesn’t dwell on the credibility of some licensees’ failures to adopt HB 322-2007 “Reference Checking in the Financial Services Industry” but instead offers three resources that might help those licensees committed to acting efficiently, honestly and fairly.
Smarter Compliance. As easy as it has been to highlight the ignorance and arrogance of some advice ‘leaders’, the reality is that their failings may have been exacerbated by compliance functions that were impotent, ignorant or lacking in courage. In fact, ASIC might add ‘compromised’ as a defining feature of some of these compliance functions. The sad truth is that ASIC was not alone in its criticism of compliance functions; both APRA and the Banking Royal Commission have echoed similar concerns and highlighted a need for the transformation of ‘compliance’. This article considers how burgeoning expectations about competency, capability and courage should apply to your compliance function.
Smarter compliance. Best Interests. Safe Harbours. Client Priority. All the drama with the Royal Commission has distracted attention from the only issue that really matters - To what extent are advisers acting in their clients’ best interests. The short answer from us is that the best advisers have never wavered from their ethical and professional commitment to act objectively in the interests of their clients. For these advice professionals, the best interest duty, simply reconfirmed their approach to advice, service and care. This might not be the case for all advisers. This article explores these issues with reference to both the #BankingRC Final report and Hub24’s excellent 2019 report “The Adviser’s Best Interests Duty: Creating Better Advice.”
Smarter compliance. In a previous newsletter, we addressed five common errors in Self-managed Super Fund advice. We also included some frightening statistics surrounding the level of trustee knowledge, and the adviser’s role in the advice process. In this article, a former adviser draws on his experience to nominate five critical considerations (and accompanying ballads) that deserve closer consideration.
Smarter compliance. For those of us interested in the future of advice (and the far smaller number of us interested in compliance), technology - and, specifically, in regulatory technology (“reg-tech) - is particularly appealing. Well-designed solutions, customised and properly supported, can make advisers and licensees both more efficient and more effective. Better yet, the proper technology can be a source of competitive advantage in a highly regulated industry. This article looks at alternative views, offers seven questions to consider and reminds us that, if we make the wrong calls, technology can be “a good servant but a bad master”
Smarter Compliance. This year will be a challenging and momentous year. Change may be inevitable and irresistible, but it needn’t be fatal. The better licensees and advisers have already separated themselves from the pack and started to transform themselves to succeed in the new environment. This article explores what they’re doing and how they’re doing it. Don’t be left behind.
Smarter Compliance. The business of financial advice is hard. In addition to a range of legal and professional obligations, the complexity of individuals’ specific needs and the challenge of regulatory arbitrage, Licensees and Advisers are expected to be well-informed about an ever increasing number of financial products and platforms. Consistently providing appropriate financial product advice is an insurmountable challenge unless the Licensee has an effective research process and a well constructed APL. In this article, we answer a user’s questions on the role and use of the APL.
Smarter Compliance. 2018 might have been an embarrassing, dramatic and traumatic year for the financial services industry (and the Commission’s Final Report is yet to come) but Compliance Professionals have had enough ‘gloom and doom’ for the moment. As 2019 lurches forward, we identify three ways that 2019 could be a very good year for compliance staff. Sure, you’ll still be over-worked and misunderstood but you may also start to be appreciated and valued. Work smart, seize these opportunities and you’ll transform your role and increase your influence. Good luck.
Smarter Compliance. Since their introduction in 1999, the popularity of the SMSF has remained relatively constant despite the ups and downs experienced within the share market, housing market and industry. We review a lot of advice. While our experience with SMSF doesn’t entirely accord with ASIC’s view that 90% of SMSF advice is ‘poor’, we have noticed some common issues in the advice we have reviewed. This article discusses five elements you need to address to ensure that your SMSF advice doesn’t “suck”.
Smarter Compliance. Happy New Year. 2018 was a challenging year for many Licensees but, for all its tension and drama, it highlighted problems that openAFSL solves and introduced new issues that we had anticipated. While others were caught flat-footed, our reg-tech platform quietly deployed the solution they needed. There’s still time for you and we’re happy to help. Call or email us to learn how OpenAFSL can ensure that you act “efficiently, honestly and fairly” in 2019.
Smarter Compliance. For all their obvious similarities, Compliance and Risk Management are two management disciplines demarcated, fundamentally, by arbitrary distinctions, assumptions and biases. As appealing as the status quo may be to existing players, the Banking Royal Commission has highlighted the desperate need for licensees to take compliance and risk management seriously and build effective and efficient functions. The best approach might be to combine them . This article examines the obstacles in the way of a building an effective CGRM function and the reasons to do so quickly.
Smarter Compliance. Peter Turbach from MDA Guru believes that, as a result of FOFA, ASIC Regulatory Guide 179 (RG 179) and the Royal Commission, financial advisers, investment managers and MDA providers are struggling to identify how to identify the path forward in the face of regulatory ambiguity, legislative equivocation and uncertainty. In this article, Peter answers our questions and offers some thoughts and advice to advisers dealing with MDA and SMA.
Smarter compliance. While their peers have been focused on Christmas parties and their eroding cryptocurrency fortunes, our Development Team has been slaving away to deliver even more enhancements. When you see what they’ve delivered, you might even agree they deserve Christmas Day off this year.
Smarter Compliance. In previous articles we've addressed the limitations of disclosure, RG181, s961J and the seemingly inevitable tendency for advice businesses to subordinate their clients' interests to their own. Conflicts exist in all commercial enterprises but the challenge for businesses providing financial advice is the effective and efficient management of these conflicts. The question seldom asked is whether these conflicts can ever be effectively and efficiently managed. This article introduces relevant research, including the research paper submitted to the Royal Commission by Professor Sunita Sah.
Smarter compliance. Section 912A(1)(a) of the Corporations Act requires a financial services licensee to “do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly”. As we’ve seen from the Banking Royal Commission, this is neither verbiage nor aspirational sentiment but a compendious expectation that requires consistent and demonstrable competence, capability, efficiency and integrity. It’s also an obligation that the law expects to apply equally to the Licensee and their representatives. This article moves from the specific case of ASIC v Financial Circle to the reasonable compliance arrangements expected of licensees.
Smarter Compliance. We are now on the eve of the implementation of the Corporations Amendment (Professional Standards of Financial Advisers) Act. FASEA and this legislation will significantly change the training, education and ethical standards for financial advisers and reshape the advice profession. This article explores the significance of the proposed change in education standards, maps out the practical differences and draws on similar examples to highlight the facts that advisers will need assured support to weather these changes.