ASIC commissioner rejects complaint time frame, SOA grumbles

Speaking at the Stockbrokers and Financial Advisers Association (SAFAA) Virtual Conference, ASIC commissioner Cathie Armour said she had found concerns about the shortened internal dispute resolution response time frame “puzzling” and she was “struggling a little bit with that one”.

Licensees will need to provide a response to client complaints in 30 days, from the previous limit of 45 days, as per ASIC’s guide issued in July. The requirement will come into effect from 5 October next year.

SAFAA chief executive Judith Fox noted the change could lead to matters not being resolved in time and ASIC identifying licensees as high risk, justifying fee increases as regulatory costs are already rising.

But Ms Armour rejected the concern, saying the previous 45-day standard had been in place for 20 years.

“So in 20 years, the technology changes that this industry had dealt with, that have been a massive investment, that have allowed it to be rigorous and agile enough for example, to on mass start working from home from the drop of a hat,” she said.

“It really seems to me that it is something that people are capable of adjusting to on that reduced time frame. And I’d be very surprised if this industry, which is so well organised when it comes to using technology, isn’t able to make that adjustment.”

She added the change will come in a year and there are two exceptions allowing longer time frames, when the matter is complex and when the matter entails something that is beyond the licensee’s control.

Ms Fox also asked Ms Armour if there was a conflict between making advice affordable against a requirement from licensees to ensure compliance, referring to comments on statements of advice from Assistant Minister for Superannuation, Financial Services and Fintech Jane Hume.

Ms Hume has flagged the possibility of the government extending SOA relief for scaled advice during a July webinar, commenting she had heard about advisers completing 80-page SOAs, which she called “crazy stuff”.

“I’m not sure if there’s a conflict or just a gigantic misunderstanding. We would say an 80-page SOA is a real problem as well,” Ms Armour said.

“We’re looking for communications with clients that are clear, concise and effective and how on earth an 80-page SOA meets that requirement is a real concern from our perspective. And I think perhaps … there’s a perception that one needs to produce lengthy documents to manage some other risk, that’s not the risk that we’re concerned about.

“What we’re concerned about is providing good financial advice that meets the legal obligations, and there is not an obligation to have a lengthy statement of advice.”

Ms Armour also invited SAFAA members to send examples of where ASIC had said that advisers need to write lengthy SOAs.

The regulator overlooks past SOAs in its effort to monitor the quality of advice and systems operating in licensees.

“We don’t see that as a conflict,” Ms Armour said.

“We’re very interested to hear about more effective ways that we could test whether good advice is being given, but at the moment, one of the tools available for us is just to go and test by looking at what’s happened in the past.”

The regulator has been undertaking a project looking at unmet advice needs, with the commissioner adding it is interested in ideas and feedback from the sector.

“We’re interested in exploring things like, is there something that we can do to encourage situations where a more scalable advice could be provided, for example?” Ms Armour said.

“The framework is largely a legislative framework, we’re interested in seeing what we can do within that.”