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ASIC flags limited AFSL, superannuation advice issues as focus area in consultation

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By mbrownlee
November 17 2020
2 minute read
6 View Comments
ASIC flags limited AFSL, superannuation advice issues as focus area in consultation
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As part of its consultation paper on affordable advice released this week, ASIC has outlined that it will be seeking feedback on the challenges and practical issues faced by those operating under a limited AFSL.

On Tuesday, ASIC released Consultation Paper 332 Promoting access to affordable advice for consumers, which is seeking information from financial advice industry participants and other stakeholders on impediments to the delivery of good-quality affordable personal advice.

The consultation paper noted that the financial advice industry has undergone considerable change in recent years, with the financial advice industry experiencing a 14.6 per cent drop in adviser numbers.

 
 

“As of 5 November 2020, there were 21,284 current financial advisers on the Financial Advisers Register (FAR). This is approximately 14.6 per cent below the long-term average of 24,930 prior to 1 January 2019,” it stated.

“This is the date on which many of the reforms in the Corporations Amendment (Professional Standards for Financial Advisers) Act 2017 commenced.”

The reduction in the number of financial advisers has led to widespread concern that consumers may find it difficult to access good-quality, affordable personal advice, ASIC stated in the paper.

“Our previous research into the demand and supply of financial advice highlighted that many consumers preferred receiving piece-by-piece or limited advice rather than comprehensive advice,” it said.

In terms of the advice topics of interest, ASIC said advice on investments such as shares and managed funds was the top category at 45 per cent, followed by retirement income planning at 37 per cent and growing their superannuation balance at 31 per cent of consumers.

Areas of focus

The consultation paper outlines several areas of focus including the problems associated with providing limited advice, the guidance and examples on limited advice that ASIC provided RG 90 and RG 244, the terminology used to describe “limited advice” and the availability and affordability of personal advice.

The consultation will also explore experiences with digital personal advice or “robo-advice” and whether it’s a good way of providing quality limited advice.

ASIC will also be looking at whether the problems associated with providing limited advice to consumers is more prevalent in certain sectors or the industry or types of advice licensees.

Some of the feedback questions are focused on limited AFS licensees, for example, which allow firms and advisers that hold these licences to provide product advice on SMSFs and superannuation holdings to the extent required for recommending an SMSF or providing advice on contributions or pensions.

SMSF Association chief executive John Maroney said it was encouraging that ASIC is committing to consult with the industry on this issue of ensuring advisers can provide quality personal advice to consumers that is affordable.

“The association has long been concerned about the regulatory burden involved in providing advice, so this initiative provides an opportunity to find solutions that are affordable and workable for advisers and consumers without sacrificing the integrity of the advice,” Mr Maroney said.

Mr Maroney said that for SMSF advisers, being able to provide limited advice is a key issue.

“We believe this process is our opportunity to address the failed ‘limited licence’ regime and redesign a way for our members to provide scaled advice scoped purely for consumers with an SMSF,” he said.

The association now intends to collate member feedback, provide practical case studies, and undertake roundtables and focus groups over the next few months to present a compelling case to ASIC for the need for scaled advice for the SMSF sector.

“We want to outline to ASIC what the real SMSF barriers are and what needs to be done to solve them. We will be in touch with members to discuss this process soon,” he said.

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Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: miranda.brownlee@momentummedia.com.au

Comments (6)

  • avatar
    FOFA & FASEA
    Red-tape on steroids springs to mind!
    You wanted to cull. You got what you legislated for.
    And it is going to be a little late to stem the tide.
    People no longer trust ASIC due to "constant" changes.
    Advisors have enough to deal with: markets on their ears, with the anguish of their clients, with big brother breathing down their necks and normal operational rules and issues. It should not be like this.
    Little wonder they have and are giving up in droves!
    0
  • avatar
    ASIC is the one that should be disqualified. They are the failures.
    0
  • avatar
    The number of advisers will drop more. It must be great to be ASIC, completely destroy financial planning and then ask people why.
    0
  • avatar
    Too late, already cancelled my licence.
    0
  • avatar
    Appoint a Royal Commission, add an extra regulator, give ASIC more powers, add an extra exam to pass and up the registration fees. Worked every time in the past. Not
    0
  • avatar
    One firm Springs to mind who offers the Works to clients but you wonder if they really are following AFSL and ASIC processes.
    0
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