Calls for ASIC to reveal audit intent

The Australian Securities and Investments Commission (ASIC) has been called on to be more transparent about the purpose of its current comprehensive audit of Australian Financial Services Licensees (ASFLs).

The chief executive of the Association of Financial Advisers (AFA), Richard Klipin, has suggested the corporate regulator be more “collaborative” in its dealings with the financial advice industry.

“The AFA is aware that ASIC is undertaking a large body of work looking at the drivers of quality advice outcomes, the operation of the marketplace and access to advice by consumers,” he said. “The regulator is to be commended for undertaking this task so that sound decisions and regulations are based on fact and evidence-based research.”

However, he added, “getting good outcomes is a collaborative process between the regulator, the industry, government and all key stakeholders”.

“Stakeholder management and transparency of process is really important to good, useful outcomes,” Klipin said. “The AFA would encourage the regulator in this regard.”

His comments have come amid questioning about the ultimate purpose of ASIC’s audit, which involved an 800-plus question document issued to 20 to 30 of Australia’s largest institutionally-owned and independent dealer groups.

The questionnaire was issued under a Notice of Direction, meaning licensees must comply with the request, and some licensees with smaller compliance resources have admitted they are struggling to compile the required information, much of which has not been traditionally recorded.

Some have suggested that not enough time has been given to complete the audit, raising concerns they will miss the March 5 deadline.

“We don’t object to the principle of [the audit] by any means if it’s going to improve the industry,” one mid-tier compliance manager said. “But if we’ve got to go through and provide all this information then we should probably get some feedback from it.”

Some industry participants believe recent inquiries into the financial services industry have exposed the regulator as having insufficient knowledge of the sector it regulates.

This is not the first time ASIC has been called upon to make clear its project aims.

Last year there were calls from some West Australian licensees for ASIC to publish reports from its Quality of Advice project in the interest of transparency. ASIC launched that project in April last year by sending out a notice to a number of ASFLs asking them to produce certain information and documents. No mention was or has been made of the project’s purpose.

The regulator has also hinted it would undertake a series of shadow shop events of AFSLs this year.