ASIC defends role in CPA advice launch

On Friday, ASIC chairman Greg Medcraft appeared alongside CPA Australia CEO Alex Malley for the launch of CPA Australia Advice Pty Ltd, which the regulator described as a “bold initiative” and praised for being a “nudge” for the industry to improve “quality and access to advice”.

Many stakeholders indicated their disapproval of Mr Medcraft’s involvement as reflective of bias – both in the ifa comments section and in letters to the editor, with a number calling on the ASIC chair to resign over the incident.

However, an ASIC spokesperson told ifa that Mr Medcraft is “not advocating one model over another” and that the corporate regulator is instead in favour of “supporting initiatives which provide these people with choice in their selection of a financial adviser”, adding that ASIC hopes the CPA advice model will achieve this goal.

Asked whether Mr Medcraft’s endorsement would have any bearing on CPA’s intended application for an AFSL, the spokesperson replied “certainly not” and explained that “every applicant has to comply with the law and this initiative is no different”.

In launching the new venture, Mr Medcraft also indicated ASIC “would very much welcome working with CPA Australia” on the development of an ASIC-approved code of conduct – the first of its kind.

“That would be a major step forward,” Mr Medcraft said.

Meanwhile, a statement on the CPA Australia website explains that only CPA members will be invited to use the new licence should it be granted.

The statement also says that CPA chose to go public before, rather than after, it had successfully completed an AFSL and ACL application because “everything we do is about transparency and importantly, we wanted to provide our members with time to prepare for transition to the new offer”.

“Having witnessed the steady erosion of the community’s trust in the financial planning sector in Australia over recent years, CPA Australia’s Board has determined that we are going to make a major contribution in the public interest to rebuilding confidence,” the statement said.