‘The legislation is not onerous’: The issue with compliance in advice

On a new episode of the ifa Show, the dealer group’s general manager of compliance, Phil Osborne, discussed a recent opinion piece written for ifa in which he called for “evolution, not revolution” in the financial services industry and for the sector to work with the legislation put in place instead of trying to overhaul it.

“The legislation is not onerous. It's what we've done with it over a period of many years…” Mr Osborne said.

On the podcast, Mr Osborne said the documentation in advice has grown rapidly over the years and recalled reviewing files back in the mid-2000s which he called “the donut file” in which a fact find was completed for a client who would then get a statement of advice.

“But you'd look at the file and say, ‘Well, okay, where's the due diligence? How did you actually determine that what you're recommending is what's actually the best thing for the client?’”

“One of the things that we're seeing is that over time, all of these extra things that have come along, and it's now a case where people might move from one licensee to another, because a licensee has determined to say, ‘Right, this is what we want in these documents.’ All of a sudden in the head of the adviser it's, ‘Oh, that's compliance. And that's the legislation that's actually telling me I've got to do that.’ It's not actually the legislation that's saying that, it's the licensee's interpretation of what they want to be able to say.

“I go back to my experience dealing with ASIC on a couple of issues over the last few years and you actually say to them, or I have said to them in the past, ‘Well you guys are the ones asking for all of these extra things to be going into it.’

“And they push back really quickly. They say, ‘No, no, no. If we ever assess a file, we assess the file. We don't just say right, what's in the statement of advice.’"

Earlier this week, wealth manager WT Financial Group announced the acquisition of Synchon; a move that will see it become the largest non-institutionally-owned financial adviser network in the country. 

Listen to the full podcast with Mr Osborne here.

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.