ASIC guilty of regulatory over-reach says FPA
The Australian Securities and Investments Commission (ASIC) has been guilty of regulatory over-reach, often tightening requirements and implementing changes which are not required under the law, according to the Financial Planning Association (FPA).
In a submission to the Senate Economics Legislation Committee inquiry to ASIC investigation and enforcement, the FPA (now the Financial Advice Association of Australia) said there existed a disconnect between ASIC’s regulatory guidance and its enforcement action.
“Licensees have often tightened their requirements and implemented changes to processes and systems for financial planners which are not required under the law or in regulatory guidance because of enforcement action taken by the Regulator,” the submission said.
“For example, as detailed in Report 515, ASIC audited and reviewed the financial advice files of the largest five licensees. As a result of the review, the Regulator mandated additional training standards that went beyond the requirements in the law and their own regulatory guidance.”
“There are also examples of ASIC action taken for a breach of s961B against financial planners even though they had complied with the best interest duty safe harbour steps as set out in regulatory guidance,” the FPA submission said.
“Whether it is within the Regulator’s mandate to impose such conditions on licensees is not the issue. It is the uncertainty that this enforcement action creates that is concerning and is having a significant impact on the profession.”
“Additionally, in many circumstances, ASIC does not publish detailed explanations of their regulatory enforcement unless it is specifically captured in a report.
“ASIC’s over-reach is evident in some guidance such as ASIC RG 277: Consumer Remediation, which set new obligations even though no regulation making power was given to ASIC in the relevant provisions of the Act,” the submission said.
Elsewhere in its submission, the FPA said that the penalties for those providing unlicensed and unqualified advice for be harsher than those which apply to licensed advisers and that there should be restrictions on using the terms ‘financial planner’, ‘financial adviser’ and terms such as ‘financial coach’, ‘financial mentor’ and ‘financial guru’
“The enforcement regime should also be touch on offences of fraud and dishonesty,” it said.
Ditto for AFCA.
Bad regulation is a combination of bad legislation and bad regulators. QAR and ALRC may address some of the bad legislation issues. Let’s hope. But neither will fix the problem of bad regulators ASIC and AFCA, that act according to their own biases and prejudices rather than the intent of the legislation.
The relationship between ASIC and Financial Advisers is absolutely toxic! It is well overdue to scrutinize the regulator.
I’m interested to know why the FPAFAAABCDEFG…don’t cite the Standards in this article, when clearly ASIC’s “over reach” is a direct result of FARSEA Standards and until these ridiculous standards are addressed (i.e. deleted), then we have no one else to blame but ourselves. Even QAR’s “Good Advice” proposal isn’t going to alleviate the burden of the Standards. Where next Mr Jones?
Going for a coffee, then lunch, then attending a paid ticket adviser event, then dining with the Industry Super exec’s…busy, busy, busy…
Find a spelling mistake in a FDS and they’ll send the entire Swat team around to break down your doors, and yet report a scam to ASIC committed by Australian Directors, using Australian Companies using Australian Banks…. and they’re not interested it becomes a statistic.
And how many Bank execs. were held accountable by ASIC over the RC??? Zero. And how many are now re-employed in similar positions or running their own consulting since??? All of them.
Congratulations FAAA. I have been a member for 30 years and this is the first time in that 30 years that they have spoken out against ASIC. I’m a bit shocked.