Doctors or advisers – who face stricter regulation?
Financial advisers are subject to harsher regulation than doctors, according to the former AFA submission to the Senate Economics Committee’s investigation into ASIC.
In a submission written by the Association of Financial Advisers (now the Financial Advice Association Australia), AFA chief executive Philip Anderson said he did not believe ASIC was a soft regulator.
He likened regulation in the financial advice space from ASIC to that of the medical profession, which is led by the Australian Health Practitioner Regulation Agency, referring to the ABC’s Four Corners program “Do No Harm” from February 2023, which covered doctors who break their Hippocratic oath but remain allowed to practise.
He said: “A comparison of the penalties that have been applied to financial advisers for misconduct with those that apply to doctors, sometimes for very serious misconduct, highlights some significant differences.
“Over recent years there has also been coverage of other regulatory regimes, including the gambling sector and the construction industry, that highlights how vigorous ASIC has been in comparison.
“In our view, ASIC was subject to unfair criticism of being a soft touch regulator as part of the fallout from the Hayne royal commission. That has certainly not been our experience. In fact, we believe that ASIC is a very vigorous regulator who has been very tough on many in the financial advice sector.”
ASIC’s actions included an aggressive pursuit of remediation programs, Anderson said, as well as an excessive pursuit of the regulated population with less focus on unlicensed operators.
This heavy approach caused “angst and anxiety” on those upon whom it was subject.
In the case of one adviser, he was subject to a 15-hour raid by ASIC and the Australian Federal Police (AFP) after being subject to an ASIC enforcement action that lasted for two and a half years.
Anderson particularly highlighted the case of the fees-for-no-service scandal, which he said has done “untold damage” to the financial advice space. ASIC’s action led to a substantial overpayment of compensation to remediate consumers and significant costs to investigate.
“This is not just in terms of reputational damage, but also in the impact that it has had on advice professionals, who have been diverted from servicing their clients to undertaking activity to investigate and search for documents, in order to help prove that they have met their obligations. This has involved a huge cost in time and often in situations where there was no evidence of any wrongdoing. There has also been a substantial mental health toll.
“It has also been one of the major factors in financial advisers losing faith in their profession and choosing to leave financial advice.”
AUTHOR
Laura Dew
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Too little too late
so true Phil!
"Anderson particularly highlighted the case of the fees-for-no-service scandal, which he said has done “untold damage” to the financial advice space. ASIC’s action led to a substantial overpayment of compensation to remediate consumers and significant costs to investigate." Finally someone is speaking publicly without fear of retribution what every single adviser has known since the RC - Thank you Philip Anderson for the facts.
Interesting that James Shipton has publicly spoken about the impact on his mental health while performing his duties at the top of the tree at ASIC, yet the unquantified damage to the mental health and wellbeing of numerous Financial Advisers and other financial services professionals due to ASICs approach to (over)regulating the industry over the last few years has never had any public attention. About time a light was shone on that perspective, to give our profession a voice for individuals Advisers, business owners, their employees and families who have been adversely impacted mentally, physically and financially by ASICs approach. The untold fallout of that would no doubt be staggering, yet unlikely to be possible to quantify for the public to understand, and ASIC to be held accountable in anyway to change their approach to regulating advice.