Since 2012, the Industry struggled first to understand, and then to operationalise, the 'best interest' duty. While the majority of Licensees eventually embraced this fundamental new duty, some participants failed spectacularly. This article considers how competent AFSL should review their compliance arrangements in the wake of ASIC v NSG and ASIC v WRM
Curated content. We're nerds. We're fascinated by our industry and its themes, issues and potential. We also appreciate that consistent and applied study is the key to being innovative, relevant and effective. This post is our cryptocurrency reading list and the post includes links so you can download the material and join in the conversation.
The finalists for the 2018 Fintech Business Awards were revealed earlier this week 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"). It's a strong field and one that shows the depth and quality of Australian FinTech Industry.
"Rivers of Gold: How the Trade Union Movement is funded by Industry Super" is a 2017 report by Morgan Begg and Simon Breheny published by the Institute of Public Affairs. Those of us working in retail financial services have at least a passing familiarity with both the 'sole purpose' test and with conflicts of interest. This report suggests that the Industry Funds would benefit from some remedial training on these issues.
In these series articles, two experts provide their (sometimes divergent) views of topics with which licensees and advisers sometimes struggle. They offer their opinions and occasionally some insight. Feel free to join the debate and offer your commentary. This article addresses monitoring and supervision and explores alternative ways of reviewing advisers. If you struggle to understand why on-site reviews are better than remote reviews (or why remote reviews are better than on-site reviews) this article may help you identify the reasons, risks and implications.
Our Compliance Solution, openAFSL, is an openAPI because we consider it the best way for our platform to solve our users' needs. This report, published by Apigee Corp in 2017, provides a strong argument in favour of collaboration for growth.
Advisers have a lot of questions about Managed Accounts - IMAs, SMAs and MDAs - as well as questions about IDPS and Wraps. Thankfully, Peter Turbach, the MDA Guru, has answers. In this article Peter answers advisers' Managed Account questions. The ten questions he addresses not only provide practical insights but nicely complement our popular article on the differences between MDAs, IMAs and SMAs.
Vertical integration isn't necessarily a problem but successive ASIC reports tend to suggest that it is. Report 562 casts shade both on vertically integrated advice businesses and the effectiveness on their compliance resources. Report 562 summarises ASIC's review of "Australia's largest banking and financial services institutions" and notes that 75% of the advice reviewed was "non-compliant advice". Read the report to understand how vertical integration, the elephant in the room, needs to be addressed if an advice profession is to emerge.
Despite his tendency to ignore inconvenient Starfleet regulations (and notwithstanding his inappropriate workplace conduct) Captain James Tiberius Kirk really "got" compliance. In fact, he embraced file-notes more frequently than he embraced Orion slave girls. Financial planners would do well to follow his example. He shows that you can be compliant and cool; on the downside, he shows us that the future doesn't have any less bureaucratic record keeping obligations.
Cryptocurrencies may have been “the future of money since 2009”, but digital currencies – like Bitcoin, Ripple and Ethereum – are only now being enthusiastically embraced by the general public. This guide for Financial planners addresses the inherent risks and benefits of cryptocurrencies and Regulators' response to their increasing fervour for virtual currencies. The guide considers whether, and to what extent, digital currencies can be considered alternative assets. It explores the practical challenges advisers face in dealing with cryptocurrencies and provides a number of tips to avoid trouble.
Few compliance professionals stumble across serious financial crime, but this fact should engender increased vigilance rather than complacency. This 2017 report from the Australian Criminal Intelligence Commission addresses fraud, virtual currencies and the role of financial professionals in organised crime in Australia.
2017 saw increased focus on gatekeepers, 'one size fits all' advice models and the quality of Licensees' oversight. The results were not pretty. Now is the perfect time for Licensees to review their monitoring and supervision arrangements to ensure that they more effectively protect clients' interests, manage risks and satisfy ASIC's legitimate expectations. This article addresses these issues and lists some key points to consider.
The search for better investment choices has seen traditional model portfolios of managed funds and equities being abandoned in favour of managed account solutions that offer increased flexibility, greater efficiencies, direct ownership and often lower costs. The true level of their appeal is impossible to determine, but the growth of Managed Discretionary Accounts (MDA), Separately Managed Accounts (SMA) and Individually Managed Accounts (IMA) is inarguable.
The best interests duty ambitiously requires the provider to "act in the best interests of the client in relation to the advice". The 'safe harbour' steps, are a statutory framework that is a partial, and not terribly effective, defence against apparent failures to act in a client's best interests. Unfortunately, an increasing number of Licensees appear to use the 'safe harbour' steps both to prove the provider's compliance with their best interest duty and to establish the quality of the advice provided. Welcome to Bizarro World.
The popular view of acceptable 'training and education' for financial advice professionals seems to increase with each new licensee failure and public scandal.
While most advisers admit the initial base was quite low, expectations have increased dramatically. Now, with new education standards looming on the horizon, the landscape of financial advice looks to change forever.
This is a great outcome for the emerging advice profession.
December release notes for the 'holy grail of compliance systems'. OpenAFSL frees licensees from the burden of compliance. This update contains the refinements, bug fixes and performance improvements that will only improve your commercial advantage over your less regtech-savvy competitors.
ASIC's industry funding model commenced on 1 July 2017. Designed to ensure that those who create the need for, and benefit from, increased regulation (and increased regulatory attention) bear the costs of these benefits, it proposes that the costs of ASIC’s activities will be recovered through a combination of "ongoing levies on regulated entities and individual fees for user-initiated regulatory functions (such as licence applications)." The "fees for user-initiated regulatory functions", and ASIC's new Service Charter, are the subjects of this article.
Your client’s goals and objectives are the foundation on which personal advice is built. Unfortunately, they are too often confused, used incorrectly or relegated in importance behind a client’s risk profile. In other cases, they’re reduced to generic and undifferentiated statements that lack detail and the reflect the planner’s recollection rather than the client’s relevant personal circumstances. Practically, the most powerful statement of your clients’ goals and objectives are the ones that come from the clients and are recorded in as close to their own words as possible. After all, isn’t the fundamental purpose of personal advice to deliver what the client needs and wants?
The central plank of the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 (‘the AFCA Bill’) is the establishment of a single not-for-profit external dispute resolution (EDR) body with a broad jurisdiction. This new super-EDR will hear complaints against financial institutions including Australian Financial Services Licensees, credit providers and credit representatives, superannuation funds (other than self-managed superannuation funds), approved deposit funds, life insurers and general insurers. The ABA thinks it's a great idea but I have some reservations.
In reality, financial planners and compliance reviewers have more in common than they realise; both understand the value of advice and both are committed to building an advice profession. I know this to be true because I've done both roles. Here are the lessons I learnt when transitioning from financial advice to regulatory advice and compliance. I know we don’t enjoy having our work turned inside out by a stranger at the best of times, and while this may never change, maybe the experience itself can. So don't look back in anger.
Advisers join Licensees for a variety of reasons - price, convenience, shared values and history - but underlying all these is the presumption that the advantages of joining a Licensee outweigh the disadvantages. What if that presumption is wrong? What if your Licensee's conduct is a far greater source of compliance risk to you then your own conduct? This article explores the risks implicit in the Licensee and proposes some practical ways to mitigate those risks.
Digital advice is the topic du jour for licensees facing rising costs, shrinking margins and a war for talent but it's not a plug and play solution. Despite the appeal of fintech, they'll still face heightened scrutiny, compliance hurdles and distribution challenges. If you're just dipping your toe into the water, this report from Planet of Finance is an excellent place to start.
Despite the inevitable march of consumer technology, I've noticed that many financial advisers still underestimate the role their website plays in reassuring prospects and establishing both credibility and legitimacy. If you're convinced that a compelling digital presence will have little, if any impact, on the growth and success of your business, then enjoy the commercial irrelevancy you've voluntarily embraced. This article examines consumer preferences, social proof and offers five tips to improve advisers' websites.
Risk profiling is a foundation element of most financial planning processes but explaining to a client the consequences of their risk assessment is much more critical than the assessment process itself. In fact, we believe this discussion is crucial to securing a client’s informed consent. Whatever assessment process you follow to determine their 'risk profile', you should assess embrace context, test your assumptions and confirm your clients’ preparedness to lose capital and sacrifice potential income. This article explains why.
On 12 September 2017, ASIC Chairman Greg Medcraft presented at the Thomson Reuters Newsmaker event and articulated his view that ASIC is primarily an enforcement body responsible for promoting investor trust and confidence in financial services. With reference to the ongoing actions involving Commonwealth Bank, NAB and a range of smaller licensees, the Chairman discussed ASIC's priorities and addressed a variety of topics including trust, reputation and culture. This article explores the reasons, consequences and implications of those views.
The Law requires that all AFS Licensees who provide financial services to retail clients must have adequate arrangements in place for compensating retail clients. In practice, this requires Licensees to maintain adequate PII unless an exemption applies or alternative arrangements have been approved by ASIC. This article summarises the review.
September release notes for the 'holy grail of compliance systems'. openAFSL frees licensees from the burden of compliance. This update contains the refinements, bug fixes and performance improvements that will only improve your commercial advantage over your less regtech-savvy competitors.