In a recent blog setting out its case for self-registration of advisers, the FPA said a key administrative drain on advisers was the multiple sets of standards they were now obligated to meet, including those of overly conservative AFSLs who had beefed up their compliance requirements in recent years.
“As well as satisfying ASIC guidance on compliance, financial planners must also meet the compliance guidelines of their AFSL,” the association said.
“In response to ASIC Report 515 on how institutions oversee their advisers, released in 2017, many licensees have added long and expensive compliance reviews to their advice processes, on top of standards already required by the Corporations Act.”
The FPA also pointed to inconsistencies in the different standards between ASIC, licensees, FASEA and the TPB, saying that while parts of the standards overlapped, they were just different enough to cause advisers grief.
“For example, there are best interest duties laid out in all these standards but there is both inconsistency and overlap between them,” the association said.
The FPA said the introduction of the FASEA standards had added another layer of complexities to advisers’ compliance obligations by introducing personal accountability as well as accountability to their employer.
“While personal obligations are a key part of professionalisation, this adds to the risk of duplicating compliance requirements,” the association said.
“This increasingly complex web of regulations is significantly increasing the cost of compliance for planners.”
The FPA said bringing together oversight, registration, fees and standards under a single entity, as suggested in its recently announced policy platform, would “create many advantages for our profession, and for Australians seeking high-quality affordable financial advice”.
I was informed a few years ago by the reputable Centrepoint executive that prof standards are based on FOS / AFCA outcomes not ASIC (bit of legacy there), and no AFSL wants to go alone and be the guinea pig. So the compliance ticket is empowered now not Australians who need advice or those good advisers who provide it. I think AFSLs need to return to this point soon and advocate a stronger voice with the FPA/AFA given complaints are so low now.
Me: “Australia has the safest financial advice standards in the world !”
Overseas friend: “Wow – that’s impressive, and you have such a complex retirement system”
Me: “Yes, we had some real forward thinking regulators who stomped out all the poor practice in 2019-2021.”
Overseas friend: “Fantastic, we could really learn from this! How many financial planners does Australia have?”
Me: “Oh… zero. We have none left. People just ask their mates.”
I couldn’t agree more with this article I use to work for a big dealer group and I would show the compliance teams the actual requirements put on us by ASIC and say I have complied with it so what is the issue they would always go back to the same crap that this is their standards and if I am authorised under them then I need to comply with their requirements.
As I have said before ABOLISH AFSL go to self registration, so we don’t have these idiot compliance officers from AFSLs telling us how to do our jobs considering not one of them even had the same education or experience in financial planning as me so how the hell would they know what is the right thing to do.
NO other industry (accountants/lawyers/doctors) have a compliance team telling them what is and isn’t right to do because how would some uneducated inexperienced compliance officer be able to tell an accountant the proper way to do a tax return
AFSL are the true leaches on our backs and once we can get rid of them running our business will be a whole lot better
If what you are implying were true the industry’s remediation bill would be far lower.
I’ve given advice under a number of AFSLs and worked in private practices in oversight capacities and there are no doubt a few AFSLs with a lot of incompetent auditors and compliance officers, but by and large I spent my time babysitting “experienced” and “educated” advisers whose ongoing work would easily be corrected by 80% of compliance officers in the industry.
Agree with this article.
I worked for several years with a large (ANZ bank owned dealer group). They had their own (at times incorrectly) instituted compliance policies and procedures which their audit teams used to slug us, even though there was no violation of the regulations.
I am now with a small boutique group which goes straight to the regulations, which I find are not as restrictive and actually at times very accommodating.
Moral of the story: big groups have to write restrictive policies to control every possible risk (the lowest common denominator). Ironically they have had the poorest compliance. Which proves the old adage, the more laws you have the more lawlessness it encourages.
I was a member for over 20 years and in that 20 years the FPA never ever came out and said anything negative against licensee’s or product manufactures etc. They have done nothing for individual planners.
The FPA makes about 1/3 of it’s income from a CFP conference, and then you’ve got the CFP Education program, FPEC, Professional Partner Program, Professional Practice program and way way down that list are payments from members. And even the majority of those members fees are paid in bulk by a large institution (NAB Wealth or Hesta) that’s likely now not around (NAB). Given no FPA conference this year, that’s 1/3 of your income gone, the departure of Banks they’re struggling. I really do hope that the FPA goes broke because this has always been a body that’s puts themselves first and advisers a distant third. Don’t trust them.
If the FPA goes, financial advice as an industry is finished. Yes, they have major issues in how they are funded and need to fix this but that is part of the cleanup process.
BTW – what is the source of your financial estimates? They seem a bit surprising as the membership fees are substantial.
Seriously. The FPA is talking about licensee standards being different to legislation. Has anyone had a read of the Professional Practice obligations, where you must meet the FPA’s interpretation of the law, their enhanced version and apparently their version of what believe are community standards.
Give us a break. Clean up your own backyard first FPA, before you start passing judgement on others.
To FPA and fellow advisers,
(Sorry to those who have read my post in other platforms, I just want more advisers to share ideas for our profession because I cannot bear with all those people messing up our industry anymore!)
I support the idea of individual registration but [b]NOT[/b][b][/b] with the string of having dealer groups to control the products and compliance process.
[b]Current problems:[/b][b][/b]
– Very expensive dealer group basic fees plus commission paid to dealer groups and so partly contribute to unaffordable advice service.
– Different approaches on APL, compliance process and documentation made by dealer groups based on guess work and causing confusion
– Possibility of conflict of interest arising from the arrangement between the dealer group and the product providers when putting products on the APL
– Government organisation such as ASIC and FASEA just sit there setting rules and wait to catch us for falling onto traps without offering guidance and help like dealer groups. They have no consequences for setting unclear rules/laws and thus cannot work in the same steps of the advisers.
[b]Ideally:[/b][b][/b]
– I want individual registration [b]AND[/b][b][/b] with simplified process monitored by one single government or appointed organisation(s) to oversee and provide practical help in compliance issues and product screening.
– Advisers can be graded like using driving licence penalty points system to determine how deep and how frequent they are being supervised.
– The same organisation will negotiate on our behalf for PI
– Advisers regardless how large the group they belong to can operate on the same level field, just like doctors, lawyers and accountants.
– Dealer groups can play the role of office and technical support, paraplanning support, training and even recruiting.
– The government organisation cannot just sit there and charge us Fees without any contribution!
[b]The expected outcome:[/b][b][/b]
– Lower operational cost and benefits consumers
– Simpler compliance process without all different approaches made by different dealer groups
– Compliance guidance and document templates are uniform to ensure compliance standard and the lowering of cost
– Bigger bargaining power to lower the cost for PI because the provider(s) is/are going to cover for the whole profession
– Consumer will just focus to select their adviser, not the dealer group behind.
– More consistent product screening because all products on the APL will be the same unlike now with different dealer groups
Hope the above will draw more and better ideas.
Why have a moan here about what’s wrong with the industry, and then go and renew FPA fees. Paying FPA fees to a body that is the muppet of some larger insto and then expecting the same thing is the definition of madness. Haven’t you just sold out your peers for a cheap CFP logo.
Why have yet another moan about an organisation that you have (supposedly) left? The FPA is now advocating for a model pretty much identical to the one espoused above.
A lot of people commenting in the industry press are so bitter and twisted and hung up about things the FPA has done in the past, they are completely blinded to how the FPA, the industry, and society in general, have all evolved. They remind me of angry old codgers in the RSL club abusing anyone with slightly Asiatic appearance “because of what those Japs did in the war”.
This is an excellent, workable comment. I wonder why some contributors are so against the FPA here. The FPA and the AFA are the only organisations that can get us out of this mess and the FPA has made a great start with individual licensing.
I don’t understand why you thought it necessary to say [i]”NOT with the string of having dealer groups to control the products and compliance process.”[/i][i][/i] Do you think the FPA is proposing this? If so, go back and read the actual FPA proposal. Also read the FPA’s recent public comments about the role of dealer groups. Do not be misled by ill informed blog comments by people whose seething rage about past FPA behaviour has blinded them to current facts.
The FPA is not proposing any role for dealer groups other than as a service provider for advisers to optionally use if they wish. Under the FPA model dealer groups would have no quasi regulatory control over products or compliance as they do now. They would not be able to use regulatory coercion to ensure the sale of inhouse products. This is why many of the large dealer groups have come out in opposition to the FPA proposal.
Unfortunately the FPA still provides membership discounts to advisers from large dealer groups, and this creates the (incorrect) perception that FPA policy is dictated by those dealer groups. The FPA should immediately end these discounting arrangements which fuel misperceptions and undermine the FPA’s message.
The life of an Adviser………..90% of time is spent writing ACM’s (i.e. Arse Covering Memo’s)…….10% of the time is spent actually serving clients. The new growth industry is now COMPLIANCE.
Note to FPA : You sat back and allowed these “standards overload” to happen and now you are acting like a white knight that wants to help solve this mess? Yet another reason why I stopped paying fees to be a member of your once upon a time relevant association…
There is a quick and easy way to reduce some of this standards overload right now. Remove the TPB from financial adviser regulation. This was proposed in a review of the TPB last year but the govt has done absolutely nothing about it.
When Jane Hume was asked about this in a recent FPA webinar she said “that’s not my job it’s someone else’s”.
It seems that Jane Hume is a minister in name only. Her only role is making vacuous speeches. I suspect she got her job purely on the basis of gender quota. If we have to have such a lightweight in the ministry for quota reasons, can we please shuffle her off to Womens Affairs or something similar? Tim Wilson should be given the job of Financial Services Minister.
Absolutely yes – the requirement to be registered with TPB is a complete waste – it is of no value.
Very unclear jurisdictions and being responsible for the actions of their advisers makes for overly cautious licensees. A rational decision for a licensee but harming everyone. Individual licensing sounds much better.
Dear AFA – where do you stand?
Pareto (80 / 20 rule) applies to compliance people as well.
The top 20% are outstanding.
The bottom 80% not so much.