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Government reveals details of new financial advice disciplinary body
The government has released new draft legislation detailing a new single disciplinary body for financial advisers.
The Morrison Government has released for consultation draft legislation and explanatory material to implement Recommendation 2.10 of the Financial Services Royal Commission and establish a new disciplinary system for financial advisers.
Minister for Superannuation, Financial Services and the Digital Economy Jane Hume said the draft legislation will strengthen oversight of financial advisers while simplifying the regulatory framework governing the provision of financial advice, helping to reduce complexity and cost for advisers.
“This is part of the Government’s ongoing commitment to ensure Australians have access to affordable and high-quality advice,” she said.
“The draft legislation expands the role of the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investments Commission (ASIC) to exercise the functions of the single disciplinary body for financial advisers.
“It proposes to create new penalties and sanctions to apply to financial advisers found to have breached their obligations and introduces a new annual registration system for financial advisers.”
Further streamlining and supplementing the new disciplinary system, the draft legislation will also implement Recommendation 7.1 of the Independent Review of the Tax Practitioners Board (TPB), by introducing a single disciplinary and registration system for financial advisers who also provide tax (financial) advice services.
The government stated the draft legislation removes the requirement for tax (financial) advisers to be registered with the TPB, and ensures relevant tax experts are appointed to the FSCP to hear disciplinary matters that involve tax-related advice.
“This will provide welcome relief to tax (financial) advisers who are currently subject to duplicate regulation and oversight,” Ms Hume said.
The draft legislation also implements the Government’s announcement last year that the Financial Adviser Standards and Ethics Authority (FASEA)’s legislative standard-setting functions will be transferred to the Minister administering the Corporations Act 2001 and its administrative standards functions transferred to ASIC.
“These reforms simplify the regulatory framework governing the provision of financial advice by streamlining the number of bodies involved in the oversight of financial advisers, while at the same time strengthening that oversight to ensure that advisers engaged in misconduct are appropriately disciplined under one system,” Ms Hume added.
The exposure draft legislation and explanatory material are available 2021on the Treasury website, with consultation submissions due by Friday 14 May.
Tony Zhang
Tony Zhang is a journalist at Accountants Daily, which is the leading source of news, strategy and educational content for professionals working in the accounting sector.
Since joining the Momentum Media team in 2020, Tony has written for a range of its publications including Lawyers Weekly, Adviser Innovation, ifa and SMSF Adviser. He has been full-time on Accountants Daily since September 2021.
Give me an experienced qualified Accountant above most Financial Planners any day of the week! All the Regulation doesn't necessarily improve anyone.0- I'd take most financial planners over most accountants but it probably depends on who you know. Most financial planners I deal with are much more qualified than accountants and more importantly they can actually talk to clients. From my experience most people doing accounting degrees simply couldn't get into Engineering. For the record I am both an accountant and a financial planner. It's time ASIC and the professional bodies took action against those accountants that continue to give unlicensed advice because they think the law doesn't apply to them.0
- Yay, FASEA is dead, YAY multiple registrations, (compliance and CPD requirements) bodies going (TPB) but I am mortified to see ASIC is not being fired for incompetence, ignorance, arrogance and blind stupidity and replaced with a true professional standards body.
Can't see the cost of advice declining any time soon I'm afraid.
Baby steps in the right direction Ms Hume but a net grade of FAIL if you think this is the answer.0 - Let's wait and see what actually happens0
- in my 44 years in Financial Services I have experienced more poor advice from Accountants than Financial Planners costing clients, sometime hundreds of thousands dollars with no recourse. I am not referring to fraud or lies. i am referring to inadequate advice and ignorance. When will we see some equity? Accountants are a part of the financial services which clients depend on and rarely question - because they don't know the questions to ask. They are unaware of what they have lost and there is no disciplinary action ever taken when the issues are identified which would highlight their ignorance and inadequate advice. Most are trained in Accounting - not strategic financial advice that saves clients thousands!.0
- Can you give an example?0
- I can give plenty but realistically it doesn't matter because the accountants weren't licensed so their clients had next to nowhere to go. City Pacific, Guvera, Mayfair 101 and 1,000's of SMSF clients are simply those I can recall off the top my head. Don't forget all the agricultural companies.0
- This comment displays a lack of experience from an entire industry perspective. It is just one opinion and I am sure there are just as many financial planners who do not consider properly the tax implications of their plans and result in inadequate advice to assist a client to reach their goals whether it be for retirement or otherwise. The last finanical planner I used was always complaining that their exams had such a large tax component but this is a major part of any plan - without considering taxation adequately it can also cost a client a lot of money and time. Many financial planners are also lacking in experience to ensure that they have encountered enough clients to understand the different scenarios that they will need to encounter. A financial planner at present does not require a degree to be a financial planner. An accountant wanting to operate in public practice has to go through a degree in accountancy which includes some strategic advice, undertake enough work experience before undertaking a CPA or CA which takes between 18 months to two years minimum and then undertake more work experience and then undertake a public practice course and exam before they can operate as their own practice or as a partner and then more experience being logged. The process is highly rigorous compared to that of a financial planner. All up it takes around 8-10 years to become a public practice operator. This process ensures for the most part people reaching this level have the right skills and competency. Note however no system is ever foolproof and there will always be some who slip through but are eventually detected.
To say that no disciplinary action is ever taken is a broad and highly inaccurate comment as there are two main governing bodies for accountants as well as a few other smaller bodies which regularly impose disciplinary action on malpracticing members and is reported each month in their respective accounting magazines and on websites. Further ASIC and other non accounting bodies (such as FOS) can also take action and again these are reported regularly. With ASIC I regularly see financial planners being penalised for a variety of reasons. Accountants that are engaged in financial planning then take on further exams and training (such as those for providing limited SMSF advice) which is yet another hurdle. I would say that the person writing the comment has taken a limited view of the entire industry and needs to look at things in its full context.
I have been through so many financial planners who are attached to dealer groups and are inadequately geared to deal with a client because the products or services cannot be provided due to dealer group restrictions. Especially with share investments. This is however my experience and I am sure there are planners out there with the right levels of expertise and independence and I take a global view that there is someone who can properly assist.
There is enough work for both accountants and financial planners. The efforts should be directed towards ensuring that clients receive the right advice at the right cost and the amount of paperwork and regulation does not stifle the ability of a planner or accountant to provide advice. It should not be directed at attacking either industry as then no one benefits from such sniping and it makes everyone look bad. There is already a significant drop in available advisers which means that the cost of providing advice will go up as many have dropped out because of all the paperwork and regulation (and cost - the latest licensing fee being nearly $4,000 for a sole practitioner adviser). Everyone needs to work together to devise a suitable outcome so that all stakeholders benefit otherwise financial planning will be only the domain of the rich who can pay and not available to everyone who needs help to ensure that they can reach their financial goals or have a comfortable retirement.0- This long statement is surprisingly accurate but lets not pretend financial planners and accountants have the same compliance regime. I've known numerous accountants who should not be practicing, including some who have fraudulently stolen money off their clients and they have realistically not been stopped by the ethics bodies of either the Chartered Accountants or the CPA. Working as a "consultant" once you have stolen money doesn't really solve the problem particularly if you still own the business. This is definitely not the majority but if stealing a clients money doesn't get you punished I'd like to know what does.0
- Lin, I largely agree with your comments however a few things have moved on including a planner now requiring a degree and a PY which not all accountants have to go through. I also agree there's plenty of work and sniping serves no purpose between the professions. In my experience a client gets the best outcome with a professional team working closely for them with congruent advice from their accountant and planner.
It has to be acknowledged however that every barrel has its own bad apples, planners, accountants, doctors, lawyers....even mechanics.
I do however come across a surprisingly high number of "tax accountants" who are woefully short on strategic planning advice (tax) for clients. They spend their life looking backwards to determine how much tax needs to be paid rather than glancing forward to see how next years return could be a better outcome for the client.
Personally I love working in the tax area as sooo much value can often be derived for a client. We don't advise directly of course, we go back with the strategy via the accountant and they provide the advice and that is where the teamwork can really pay off for the client.
Note: Most of the accountants I do work regularly with are excellent on strategy, it's just the high number of suburban accountants, often one or two man shops, that I see the greatest level of inadequate advice and or unethical behaviour like prolonging entities when a client no longer needs them simply to keep that annual return fee rolling in.0
- Cutting some of the 'red tape' is a welcome change0
- The red tape is now looking like the pile of mess on the floor as you disassemble your Christmas tree after the festive season.0
- I can imagine how it would look, something like this:
Advisor forgets to issue the latest version FSG so they cop a 20-year ban from the industry plus a $1.5 Million dollar fine and 2 years suspended prison sentence0 - Reads like a horror book - an extra regulator with more penalties announced.
Too many Chiefs, not enough Indians...0 - How many bodies of regulation remain MIA Jane Hume ?
You laughed at ridiculous 9.
Now you create another, to replace TPB?
You Roll FARSEA sideways but it still another body to deal with.
Does Single Disciplinary Body mean 1 or 9?
Please clarify if single = 1 ?0- Bodies as in dead corpses...0
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