ASIC allows legal relief but refuses ‘independence’ request
The Australian Securities and Investment Commission (ASIC) has reported that it has refused 32 applications for relief including one from a planner who requested the use of the word ‘independent' to describe their practice.
ASIC also refused an application to apply grandfathering to the remuneration earned by employees of licensee as a result of giving general advice.
The refusals were given by ASIC rejecting that ‘no-action letters' be applied in both cases, effectively forcing the two applicants to make changes as requested by ASIC.
The regulator stated it provides no-action letters "when instances of non-compliance with certain statutory provisions have been brought to ASIC's attention" and that it "does not intend to take regulatory action over a particular state of affairs or particular conduct".
In the case of the planner ASIC said the planner was not able to label their practice ‘independent' under conditions set out in the Corporations Act which restrict the payment of commissions, which the planner was still drawing on a declining book of old insurance policies.
The licensee was refused a no-action letter because ASIC stated while the licensee claimed the grandfathered commissions to employees providing general advice should continue until the proposed amendments to the Future of Financial Advice reforms had become law it was not a situation unique to the applicant.
ASIC said the issue was relevant across the industry and "law reform was the most appropriate form of resolution".
The refusals to provide relief were heavily outnumbered by the approvals with ASIC providing relief for 650 applications from a total of 803 applications during the period from 1 February to 31 May 2014 during which 57 applications were also withdrawn and the remaining 64 applications decided outside of this period.
ASIC released the statistics as part of Report 411 Overview of decisions on relief applications (February to May 2014) and stated that it can vary or set aside requirements of the law where the relief would provide "a net regulatory benefit" or reduce red tape without causing harm to market participants and consumers.
As such ASIC stated it was able, at is discretion, to modify or set aside certain provisions of the Corporations Act including chapter 5C relating managed investment schemes and chapter 7 relating to financial services.
AUTHOR
Jason Spits
Recommended for you
David Sipina has been sentenced to three years under an intensive correction order for his role in the unlicensed Courtenay House financial services.
As AFSLs endeavour to meet their breach reporting obligations, a legal expert has emphasised why robust documentation will prove fruitful, particularly in the face of potential regulatory investigations.
Betashares has named the top Australian suburbs with the highest spare cash flow, shining a light on where financial advisers could eye out potential clients.
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
