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.
Smarter Compliance. In this guest post, education expert, Angelique Aksenoff, introduces the great divide in competency standards and asks “what will happen to RG 146 and Tier 2 advisers with the uplift to financial adviser education and training standards?”. Identifying that shifting Tier 2 standards will have a far more profound impact than many anticipate, the author explores the challenges and likely consequences of these essential reforms.
Smarter compliance. From November 2018, you’ll be able to access para-planning resources via assuredsupport.com.au. Whether for remediation or just regular activity, our para-planners can prepare Statements of Advice for you using XPlan, Midwinter or Coin or another system. They’ll use your template and complete your request within 7 Business Days.
Despite the emphasis on regulated documents, and the increasing use of technology, advice has an oral foundation. Unfortunately, memory is imperfect. In reality, a failure to appropriately document client conversations, answers or agreements can challenge your credibility and expose you to additional risk. Poor file-noting may not be fatal for you, but in the event of a claim or dispute, courts may draw adverse inferences from scant or non-existent file-notes. This article addresses these risks and suggests ways you can avoid undercutting your professionalism or prejudicing your defence.
Smarter compliance. We live in interesting times. While many participants are intimidated by the Royal Commission and ASIC’s Report 594, we just kept coding to ensure that OpenAFSL continues to deliver on its promise. We crushed it in September. The full list of tweaks, enhancements and innovations would overwhelm you but, in this article, we’ll cover some of the main ones.
Smarter compliance. Good advice, as Sean Graham explains, demands solutions driven by the clients’ best interests and supported by the adviser’s bona fide consideration of alternatives. Very poor advice, in my experience, often fails to prioritise the clients’ interests. Poor advice, on the hand, often results from a failure to rigorously, efficiently or fairly considering options. The safe harbour steps require advisers to research products they’re recommending as replacements (and those they’re recommending to be replaced) but some advisers still struggle with the requirement. This article answers some of the questions we get from advisers on product replacement.
The Banking Royal Commission quickly and easily exposed profound and systemic non-compliance with the breach reporting obligations. Breach reporting may be "an important part of the regulatory framework" but the Commission’s hearings (and the Interim Report) show that, “on more than one occasion”, Licensees materially failed to comply with this obligation. Worryingly, they appeared to have suffered no consequences as a result of their failures. ASIC’s Report 594 on compliance with the breach reporting obligations highlights the extent of, and reasons for these failures. This article looks at three key take-outs for Licensees seeking to avoid regulatory censure.
Smarter compliance. Despite their focus on conduct and disclosure, Regulators are increasingly turning their attention to licensees’ ‘culture’. It’s a reasonable approach if one ignores the reality that the definition is circular and that organisational culture is not monolithic; most large institutions are collections of disparate and disconnected cultures. Nevertheless, Regulators show no sign of abandoning this idea, so Licensees must consider how they can best demonstrate a ‘good culture’ and their commitment to key principles. Drawing on international examples, this article proposes ways in which this can be done.
NSG v ASIC aside, financial planners often struggle to find cases that clearly address their legal obligations and duties. Thankfully, McDonald v AMP Financial Planning Pty Limited  QSC 195 addresses both the practice and process of financial planning and, as a consequence, highlights expectations that advisers need to adequately consider in their own businesses. Here we look at five key take-outs from McDonald’s case.
CURATED CONTENT: Despite the provocative nature of this article, we don’t have a particular view on Bitcoin, Ethereum and the various ICOs that attract investors’ attention. While we’re happy to skewer the more pretentious and ridiculous views, we have “strong opinions, loosely held” on cryptocurrencies. Given that advisers and investors are still intrigued by cryptocurrency, we’ve identified five sources that we find are particularly useful.