The Better Advice Bill has passed Parliament, which means the laws establishing the single disciplinary body for advisers and the carve-up of FASEA between Treasury and ASIC will soon come into effect.
We’ve discussed the Bill and its supporting regulations in detail over the past few months. While parts of it have been welcomed by the industry – particularly the adviser exam extension and the steps towards individual registration – there are lingering concerns about a potential cost blow-out as a result of the new laws.
This is because, as we’ve previously noted, it’s been difficult to get a clear picture of how much the SDB will cost for ASIC to operate and how much of that cost will be passed onto advisers. In a recent Senate committee hearing, ASIC financial advisers senior specialist Martin Stockfield said it was “difficult for us to estimate the exact level of resources” because “we don’t yet know exactly how many matters and what sort of matters we will necessarily be referring to the [Financial Services and Credit Panel].”
While the regulator hasn’t received any extra funding to implement the Better Advice legislation, increased costs to advisers haven’t been ruled out.
At the same hearing, ASIC financial services and wealth executive director Joanne Bird explained: “To the extent that this bill may mean that ASIC will spend more of its resources on the financial advice population, then the financial advice population will pay more under the industry-funding model.”
AFA general manager, policy and professionalism Phil Anderson highlighted this uncertainty in a statement following the passing of the Better Advice legislation, saying that the AFA is “concerned about ASIC being required to investigate minor breaches of the law, even if they do not choose to refer them to a Financial Services and Credit Panel.”
“This will add unnecessarily to the cost of running the Single Disciplinary body,” Anderson continued, “which ultimately financial advisers and their clients will need to pay for.”
Anderson added that the AFA is also concerned about the “complex mechanism for the transition and registration of some tax (financial) advisers under the Tax Practitioners Board.
“We will be calling for these changes as part of the Quality of Advice Review that the Government has committed to running in 2022.”
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