After being publicly dragged over the coals throughout 2014, ASIC is “definitely asking more questions” of the industry, Hall & Wilcox partner Harry New told ifa.
Issuers looking to launch new products are receiving the most scrutiny from the regulator, Mr New said.
“In my recent experience there seems to be more inquiry into products that are being proposed by those applying for a licence,” he said.
The final report of David Murray’s Financial System Inquiry included a recommendation that ASIC be granted product intervention powers, similar to those held by the Financial Services Authority in the UK.
While ASIC does not yet have powers to intervene in products ‘per se’, the regulator is definitely making it harder than it used to be to launch a new product, Mr New said.
“When you apply for a licence you need to describe your proposed business, as well as your strategy and plans,” he said.
“They are asking more questions. It would appear that ASIC is interested in finding out more and using it as a means for gathering information,” Mr New said.
In most cases licences are still being provided for new products, but the process is a longer one and ASIC appears to be consciously drawing it out, he said.
“What they’re also doing more of is conducting risk assessments of particular industries and products,” Mr New said.
“So if you’re applying for a licence for something like foreign exchange trading platforms, that will be a much harder process (and licence) to get than if you were going for a wholesale equities fund, say,” he said.
Derivatives-based products are up for more scrutiny as opposed to less complex products, he added.
ASIC is also drawing out other processes such as the lodgement of breach reports and administrative documents, Mr New said.
“Whereas I think many may have been more perfunctory in the past, ASIC seems to be responding to them in a way that they might not have in the past,” he said.
Fred and Tim are both right – of course – BUT it needs to be said that for so many years advisers were merely “representatives” and “agents” of the product providers – paid by them – so it’s no wonder we have been grouped in with them. Then we let them take over the FPA (using “sponsorship”) so again the public and the regulator saw us as product floggers… all with perfectly good reason. It will take some time for that to dissipate but it’s happening. What’s needed now is for advisers to kill off the last vestiges of that previously incestuous relationship. It needs to be a public, open and final split and it will need to include insurance products as well as investment products if it is to be fully understood that we ONLY work for our clients’ best interests.
Well said Tim and 100% correct. They should take a long hard look at existing product providers as well.
About bloody time. In excess of $10 billion worth of shonky products blew up during the GFC. And who got the blame? Advisers.
Product disclosure statements were misleading, fees were misleading, the nature of the investments were misleading, some business models were built on a house of cards…