ASIC has provided a new update on its affordable advice project in the form of an infographic.
Much of the information provided in this update is similar to the “high-level briefing” on the industry’s response to CP 332, which was made available following a request from LNP Bert Van Manen during a parliamentary joint committee meeting in March. As in the requested briefing, ASIC’s update notes that RG 244: Giving information, general advice and scaled advice was a particular area of concern in many submissions.
Many participants in the consultation said RG 244 was too long and required restructuring, and in some cases licensee policy didn’t allow it to be followed by an adviser. Moreover, advisers said ASIC’s guidance conflicted with their obligations as per the FASEA Code of Ethics.
Back when ASIC released its first briefing, the regulator said it planned to pass on the feedback concerning RG 244 and the FASEA Code to Government. While the new infographic explicitly avoids discussing “ideas requiring law reform,” ASIC said that feedback has now been submitted.
Advisers (and other industry stakeholders) also identified what they saw as the primary issues driving up the cost of advice. These included:
- overheads and fixed costs
- SOA preparation
- regulatory and governance costs
- conservative licensee policies
The cost and time involved in producing an SOA has long been an issue in the industry. As we discussed in April, multiple advice businesses and industry bodies have proposed various modernisations of the SOA system.
Most recently, the FSC argued in its Affordable and Accessible Advice report that “outdated documentation and record-keeping requirements have arisen as a result of over-regulation and regulatory duplication,” which detracts from advice being “clear, concise and effective”.
As a result, the FSC recommended “simplifying the documentation and disclosure requirements for all forms of financial advice. Feedback from industry is that reduced documentation requirements would have the single largest impact on lowering the cost of financial advice.”
The report added that the FSC’s consumer testing also revealed consumer support for reduced documentation, which respondents indicated was a “good idea to reduce cost”.
We’ll provide further information about ASIC’s response to these issues as it becomes available.
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