The law should be changed to further remove financial planning licensees from the provision of financial advice, giving advisers more control, according to the Financial Planning Association (FPA).
The FPA has specifically recommended that the law be changed to focus the Australian Financial Services Licensing (AFSL) system on the regulation of financial products while removing the requirement for an AFSL to cover the provision of financial advice.
The FPA’s submission to the Australian Securities and Investments Commission (ASIC) affordable advice review referred to a survey of members which pointed to advisers being uncomfortable operating within the confines dictated by their licensees.
“Many FPA members complained that the prescriptive approach to compliance taken by their licensee limited their ability to exercise their professional judgement and deliver financial advice in a manner that was more affordable for their clients,” it said.
“Licensees are responsible for the delivery of advice by their authorised representatives and so have a legitimate interest in setting standards and checking compliance,” the FPA submission said while noting that “over the past five years has led many licensees to taking an extremely conservative approach to compliance”.
“FPA members noted that this conservative approach was not to the benefit of the clients as it resulted in significant delays in them being able to provide a statement of advice (SOA) to their client as well as restricting their ability to provide their advice in a more consumer-focused manner,” it said.
“Finding a method of serving clients that addresses their needs while still complying with relevant regulation is critical to the future of financial planning. This would best be achieved by giving financial planners more control over how they deliver their advice and allowing them to be more responsive to both clients and regulators.”
“The FPA has argued that the ultimate goal of reforming financial advice regulation should be to enable financial planners to exercise their professional judgement in complying with professional standards and for them to have a direct and singular relationship with the appropriate regulator, rather than an indirect relationship through their licensee.
“This approach would ensure that financial planners were able to maintain a degree of flexibility in how they service their clients and for licensees to focus on the delivery of support services to financial planners.”
