Regulatory complexity ‘hindered’ advisers in passing exam

Mike Taylor

Managing Editor/Publisher, Financial Newswire

6 December 2022

Financial advisers studying for the Financial Adviser Exam have been hindered in their efforts to navigate the relevant laws and regulations due multiple layers which have been allowed to accumulate over the years.

What is more, that complexity means that finding provisions relevant to financial advice with absolute certainty is “extremely problematic for those operating under the legal framework”.

That is the message delivered to the Australian Law Reform Commission (ALRC) by the Financial Planning Association (FPA) which has reinforced the need to separate the rules applying to Relevant Providers and those applying to Australian Financial Services Licensees (AFSLs).

“There should be dedicated sections that allow all users to easily find all the responsibilities of the:

• AFSL holder
• Individual professional practitioner
• Regulator
• Single Disciplinary Body (financial services and credit panel)
• AFCA
• Product provider

“This would help planners to be able to understand the obligations licensees are responsible for versus the requirements that they as practitioners are responsible for, and vice versa,” the FPA submission said.

“Importantly, there must be clear delineations of responsibilities between financial planners and the obligations product providers are responsible for. Consumers should also be able to differentiate between responsible parties more clearly, particularly in relation to services provided by financial planners and product providers.”

“The current state of the financial advice regulatory environment makes it appropriate for prioritisation for transitioning to the proposed legislative hierarchy. As noted by this Review and many others, the current regulatory environment for the provision of financial advice is excessively complex. There is also significant duplication of the obligations within the Corporations Act that exacerbates this complexity and regulatory burden.

“Given the concurrent Quality of Advice Review (QOAR) being undertaken by Michelle Levy, consideration should be given to the implementation of the recommendations stemming from the QOAR within the ALRC’s Final Report,” the FPA submission said.