Govt proposes changes to regulation
Chris Pearce
In the scope of the Government’s proposed changes to financial services regulation is the compliance burden surrounding Statements of Advice (SOA) and personal advice, an issue that Parliamentary Secretary to the Treasurer Chris Pearce hopes will be significantly reduced.
Under the suggested amendment, an SOA will not be required when personal advice is provided that does not involve the recommendation of a product and no remuneration is received.
Instead, a Record of Advice would be required to be prepared by the adviser.
A threshold for requiring an SOA has also been proposed in an effort to address the issue of smaller scale investors having limited access to affordable financial advice.
If this reform is approved, a full SOA would only be required if the advice is given in relation to an investment amount above $10,000, except in relation to superannuation.
Again, a Record of Advice would need to be kept in these circumstances.
Other areas of financial services regulation that are covered in the proposed changes include the definition of wholesale investors, PS 146 training requirements, non-cash payment facilities and the product disclosure of pooled superannuation trusts.
Announcing the proposal package last week, Pearce said the changes, which also encompass corporate regulation, were designed to create a less complex regulatory environment.
“This is a red letter day for the corporate and financial services industries,” he said. “The reforms signal clearly the Government’s continuing commitment to reducing the regulatory burden.”
Financial Planning Association chief executive Jo-Anne Bloch welcomed most of the proposals, but also expressed disappointment that superannuation had been excluded from the $10,000 threshold proposal.
Bloch shares the concern of many that the consolidation of a number of small accounts from different superannuation funds has the potential to attract high fees.
“The Government is aware of our concerns, and has stated that this is a journey, taking one step at a time,” she said.
“The consultation process means that we have an opportunity to state our case and convince the Government why Australians need advice on superannuation, as well as other financial matters, and that those with small superannuation account balances should not be excluded.”
The Government is calling for industry feedback and public comment on the proposed refinements to be received by December 22, 2006.
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