The Australian Law Reform Commission (ALRC) has released its latest background paper for the financial services legislation inquiry – Reflecting on Reforms – Submissions to Interim Report A (FSL6) – in which a number of stakeholders expressed support for “recasting the safe harbour provisions as indicative behaviours of compliance”.
In its submission to the ALRC, the Association of Financial Advisers (AFA) wrote that the safe harbour provisions have “become a very prescriptive tightly applied obligation that has unfortunately added significantly to the complexity and cost of providing financial advice”.
Similarly, Professor Elise Bant of the University of Western Australia said the current provisions “promote formalistic and legalistic approaches to ‘compliance’… nicely labelled as a ‘tick a box’ mentality”.
The SMSF Association has also backed the recasting on the basis that it would allow advisers and licensees to use their “ethical and professional judgement”.
The ALRC noted that a number of stakeholders called for the proposed reform to be considered as part of, or after, the finalisation of the Quality of Advice Review in December.
The ALRC’s paper comes after the government agreed to simplify and clarify the safe harbour provisions in March.
The government ticked off all 14 recommendations in the final review of the insolvent trading scheme, vowing to work towards a “plain English best practice guide” that sets out general eligibility criteria for appropriately qualified advisers.
The government agreed that a best practice guide should be development in consultation with key industry bodies and handed down by the Australian Securities and Investments Commission (ASIC).
