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Melbourne lockdown posing compliance concerns for advisers

Sarah Kendell
10 August 2020 — 2 minute read

The six-week stage 4 lockdown of the metropolitan Melbourne area could pose significant hurdles to some advisers meeting compliance requirements around dispute resolution, client fee agreements and licensee annual returns, according to an adviser association.

AIOFP executive director Peter Johnston has written to both the Victorian Premier’s office and ASIC last week on behalf of members, following concerns that the lockdown would affect advisers’ ability to conform to several of their AFSL obligations.

In the communications, Mr Johnston said members had raised their RG 165 obligations around internal dispute resolution, which require licensees to provide a full response to a consumer complaint within 45 days, as a particular concern.


“Under RG 165, which deals with complaints against advisers by consumers, the adviser must deal with the complaint in a ‘timely manner’ which is indicated on the ASIC website should be 14 days and a decision provided within 45 days,” Mr Johnston stated.

“If an adviser’s business is closed for six weeks, consumers have no recourse and our members cannot conform with their statutory duties.”

Mr Johnston urged the Premier’s office to reclassify advice as an essential service under the strict lockdown provisions which came into force last week, requiring all financial services businesses other than retail banking to cease on-site operations for six weeks.

In a further communication to ASIC chair James Shipton, he also suggested Victorian advisers be given regulatory relief from IDR requirements during the lockdown period, similar to the increased complaint processing times allowed by AFCA during the nationwide lockdown in April.

The requirement for clients to renew fee agreements with their advisers for the new financial year has also been a cause for concern, with a number of sister brand ifa’s readers including Roxburgh Securities senior adviser Steve Blizard suggesting the inability to conduct client meetings could pose a significant threat to the livelihoods of adviser businesses.

While the requirement for advisers to move to annual fee agreements with clients has been postponed to next year, a number of large institutions including AMP have moved ahead of the regulator to transition their advisers to annual agreements before the legislated timetable.

However, a spokesperson for AMP said the group had rolled out DocuSign functionality across its adviser network in response to the COVID-19 crisis, meaning advisers based in Victoria would not need to meet their clients in person to get the agreements signed.

“We are very mindful of the impact of stage 4 restrictions in Victoria on our clients and our advisers,” the spokesperson said. 

“We want clients to be able to continue to receive financial advice when they need it and for our advisers to be able to continue to operate their businesses and support their clients.

“In response to COVID-19, we rolled out the DocuSign platform to our entire adviser network to enable our advisers to obtain electronic signatures from clients on advice statements and other documentation. We have also provided detailed guidance on giving compliant advice remotely and advice on using video-conferencing software.”

Annual returns for licensees are also being flagged as another potential concern for Victorian advice practices, with Mr Johnston saying members had been advised by their accountants to expect delays in processing returns due to additional complexities involved, with businesses receiving COVID-19 support payments from the government.

“Members are being informed by their accountants that the additional JobKeeper and related activities are causing delays in completing their 2019 return and it may be some time before they get onto their 2020 work,” he said. 

“This is, of course, a threat to having their financials done, audited and lodged in time for the September or October AFSL deadlines. This problem will, of course, be more severe in Victoria with the COVID shutdown.”

Mr Johnston has asked for clarification from ASIC around whether lodgement deadline extensions would be granted for affected AFSLs.

Melbourne lockdown posing compliance concerns for advisers
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