Industry body urges end to vague regulatory guidance

In a new policy paper titled Creating a fairer compliance regime, the AIOFP said it was “time for regulators such as ASIC, AFCA and FASEA to move away from the policy paradigm of not giving practical direction to advisers on compliance matters”, which was increasing the cost of compliance for licensees and making advice increasingly unaffordable for the middle class.

“This culture has increased the uncertainty amongst the adviser community and driven some parties to install a superfluous compliance bureaucracy where the cost is being passed back to consumers,” the association said.

“Advisers are at the coal face dealing with consumers and are highly respected by them; these people become family and the last thing advisers want is having to cut them off due to compliance costs.”

The paper pointed to scaled advice as a good example of a grey area that many practitioners and licensees were wary of operating in, given the lack of clarity from regulators around how it could safely be provided from a compliance perspective.

“While advisers are told that on one hand scaled advice is an acceptable form for advice provision, assessments made by regulators regularly posit that additional material and disclosure is required, seemingly negating the acceptance of the use of scaled advice,” the association said.

“Can the situation be dealt with utilising a ROA or a short letter outlining the advice position, or is a SOA called for? If a SOA is called for, to what extent can the advice be scaled, or is a full situational advice SOA required?”

The association also called attention to contradictions in guidance around the SOA, which was estimated to take advisers around 10 hours to produce.

“Sections 947B (6) and 947C (6) of The [Corporations] Act state that ‘the statements and information included in the statement of advice must be worded and presented in a clear, concise and effective manner’,” the paper pointed out.

“That this statement is made identically in each of the two sections of the act noted above, it would suggest that this is an important point to adhere to when writing advice documents, and for regulators to consider when documentation is presented to them.

“Experience though is that regulatory scrutiny, even of long and complex documents, consistently finds that additional materials should have been included.”

The association said it planned to present the paper in front of a roundtable of MPs in Canberra in October.