ASIC chair must save sector ‘grossly’ stung by regulatory burden

Appearing at a Senate committee last week, Joe Longo addressed “regulatory overload” within the sector, saying, “I am concerned about this sector. I think it’s really important that consumers have access to affordable advice, to financial services advice.”

Speaking to ifa, AIOFP executive director Peter Johnston laid out specifics that Mr Longo and ASIC can be doing to assist the industry.

“Whilst we applaud Joe Longo’s enthusiasm for his new role and recognition that our industry is grossly over compromised with compliance, we can only see two areas where he can assist to make a real difference,” Mr Johnston said.

“Our industry has been ‘highjacked’ by the legal fraternity scaring practices into implementing the highest level of compliance to any piece of advice to ‘keep safe’ from ASIC.

“A greater volume of compliance translates into more fees for lawyers. What we need ASIC to do is give practical guidance to practice directors on what content they expect in SoA’s to keep the volume and price of compliance down for consumers.

“The other valuable role for ASIC is to have ongoing dialogue with AFCA and the industry on their decision-making process to ensure continuity within the industry and lower PI costs.”

Mr Johnston added that there are more “badly needed” changes needed for the industry but can only be delivered by legislative amendments, which include:

• Aligning the time frame for completing the FASEA exam with the deadline for updating education qualifications.

• The opt-in to an ongoing service agreement be every three years.

• The commission rate for risk products be increased to 85 per cent upfront, 20 per cent ongoing and 12-month obligation period.

• Any adviser with minimum of 15 years’ experience in advice not require a degree to remain in the industry.

“We have become very cynical with the way this Government gives snippets of information about agreeing with controversial issues like risk commission/FASEA/LIF but it is all deferred until post-election,” Mr Johnston said.

“Unfortunately we don’t buy into this strategy, we think it carries more weight this side of the election.”

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.