What changes will ASIC make from its affordability review?

Addressing the Stockbrokers and Financial Advisers Association 2021 Conference, ASIC commissioner Danielle Press said the regulator had received almost 500 submissions over the course of its consultation on promoting access to affordable advice.

“It was the most submissions ASIC has ever had to a consultation – we made it easy to put in a submission, but also with the interest in this space and the diverse views that are out there in the market, it was quite surprising the breadth of submissions we got,” Ms Press said.

She added that one of the key pieces of feedback was around the length and complexity of ASIC guidance, which the regulator would look to address through better testing and engagement with practitioners.

“What didn’t surprise us was that practitioners think our guidance is a bit difficult to understand, it’s a bit long, so one of the things we’re taking away from this is how do we make that more accessible,” Ms Press said.

“How do we talk to advisers as well as compliance people and licensees – we need to talk to both, and I don’t think we’ve done that as well as we could have.”

Ms Press said there was also a perception from the industry that scaled advice was in conflict with the FASEA code of ethics, something that needed to be better clarified between the two regulatory bodies.

“What we try to do is work through examples with FASEA that highlight and solidify the fact that scaled advice is okay. In Stephen [Glenfield]’s mind FASEA is saying scaled advice is fine, so let’s get examples to put out to get rid of the tension we’ve got between the two,” she said.

“It’s an artificial tension we need to get rid of, and the way we do that is work with FASEA to ensure the examples we put forward in regulatory guides are consistent with what FASEA is saying is compliant.”

She added that ASIC would also look to improve its guidance around SOAs, as well as opening up more circumstances where an ROA may be used in its place.

“I think there’s a bit of a myth that ASIC requires a 280 page SOA – we don’t and I think there are things we can do to make guidance clearer about shortening up SOAs,” Ms Press said.

“I’m encouraging industry participants to think about what is the SOA, how does it need to look, because it doesn’t need to be as long as people are saying it does by law. With respect to ROAs we are open to that conversation. The question becomes when can you use a ROA and when do you need to do a full fact find, and we’re thinking about what that can look like.

“An ROA has a strong role to play but I encourage you as an industry to think about how can we shorten the SOA, and we’re open to working with industry on that.”