FAAA warns ASIC’s wholesale advice approach risks distorting market
The Financial Advice Association of Australia (FAAA) has directly questioned the Australian Securities and Investments Commission’s (ASIC’s) approach to wholesale-only financial advice, arguing that it risks distorting the market and creating risk.
As well, the FAAA has argued that scrutiny should not only be directed at what ASIC is doing as a regulator, but what it is not doing and cited “misconduct referred to/reported to ASIC by its regulated community and professional bodies that is not actioned, responded to, or investigated”.
It told the Financial Regulator Assessment Authority (FRAA) that recent information from the ASIC Funding Model indicated that in 2022/23 ASIC spent $55.5 million on financial advisers who provided personal advice on retail clients, and only $35,000 on licensees who provide personal advice to wholesale only clients.
“The standards that apply in the wholesale only client sub-sector are much lower, creating substantially greater risks,” the FAAA said. “This distorts the market and creates a very real risk that issues in the wholesale only client space are being missed.”
The submission suggested that ASIC would do well to listen to those active in the market when gathering intelligence on potential misconduct, stating “the marketplace is a great source of intelligence, that might not be being fully utilised”.
It then referenced “the timeframes within which ASIC a) investigates reports of misconduct and unlicensed activity; and b) takes action with respect to misconduct and unlicensed activity”.
“Common examples raised by our members include, significant delays in ASIC taking action against Storm Financial, Dixon Advisory, and reports made to the Regulator of banned or unlicensed individuals providing financial services to consumers.” The FAAA submission said.
The FAAA also pointed to the $1.82 million spent by ASIC on preventative measures of industry engage, guidance and education compared to the $28 million it spent on supervision, surveillance and enforcement.
“While the FAAA commends ASIC for its recent efforts to improve industry guidance via clear web-based information sheets, anecdotal feedback from FAAA members indicates frustration resulting from the level of assistance received from ASIC in response to enquiries about financial advice regulatory requirements and the clarity of regulatory guidance,” it said.
If FAAA are taking aim at ASIC, they should be actively vociferously critical about far more widely relevant areas that relate more closely to its member base majority than WS investor investigations by ASIC.
To the inept who negative voted my comment, explanation? You believe FP’s biggest issue that FAAA should be fighting ASIC on is WS clients, really?
Just pure ignorance not only inept!!
No ones allowed to share an opinion different to yours?
Sounds like someone has transitioned their business to a “wholesale only” model to avoid regulation, and doesn’t want anyone shining a light into its dark recesses. Move along, move along, nothing to see here!
When is the FAAA going to realize that political lobbying is NOT about articles in magazines…..its about having influence with the decision makers in Canberra……like they did with the FSC to assist Kelly O’Dywer and LIF/FASEA etc.legislation….why are they still cooperating with the Insto’s FSC? When are FAAA members going to wake up!
Why is any Financial Advisor still with these useless associations after letting us down time and time again!!! REALLY PATHETIC