Industry gives FSRA tick of approval
The Regulator—Pauline Vamos,licensing director of Financial ServicesRegulation, Australian Securities andInvestments Commission (ASIC).
FSRA turn ons:
From a regulator’s point of view, the FSRA is fantastic because it means we can apply one law across the industry, which makes us more efficient. The FSRA is essentially trying to do something that has not been done anywhere else in the world — getting all financial products under the same disclosure and licensing regime — and this is an enormous revolutionary change.
FSRA question marks:
There are still areas that clarification is being sought on. Some of the regulations basically still need some tweaking. Some of them were drafted quite quickly. I think it is safe to say that there is some tidying up to be done.
Watch out for:
One of the key challenges for financial planners will be to understand the new definitions for advice so they can make sure they comply with their obligations.
FSRA score:
Ten out of 10. Of course, if I was to rate the industry’s preparedness for the new legislation, it would be more like six out of 10.
The lawyer- Alan Jessup, partner,Hunt and Hunt.
The good:
The benefit is that once financial planners have their licence, unless there are restrictions put on the licence, basically they will be able to offer a wider range of products than they might have previously.
The bad:
The key challenge will be for financial planners to get their compliance systems in order over the next two years. They should also be looking to convert over to the new system within the next 12 months rather than wait right to the end of the two year transition period. If they do wait to the last minute, then they may not get their licence in time, as ASIC is likely to be overwhelmed with applications towards the end.
The ugly:
The Act actually imposes a criminal offence on a financial service licensee or its representative who gives financial advice that may not be appropriate for particular clients. Financial planners could be prosecuted for this sort of offence under the Act and possibly even go to jail.
FSRA score:
Eight out of 10.
It has turned out not as bad as I thought it would.
The association- June Smith, headof professional standards, FPA
Love:
The thing I love about the FSRA is that it it is an opportunity for professionals to shine. The regulation encourages the provision of honest, competent advice.
What we had before was a broad range of professionals giving advice that overlapped, but in a regulatory regime that was quite complex.
Hate:
Transitioning to the FSRA has been more difficult than expected. I think that costs have also been an issue, especially for small businesses. It is also a little unclear how some provisions of the new legislation will work.
Transitioning:
Before they transition across to the FSRA, financial planners should, first of all, read the law. They should then familiarise themselves with their business and make the hard decisions about what they want to be licensed in and, if there are new areas they want to be licensed in, make sure they are competent in these areas before they transition.
FSRA score:Seven out of 10. I always liked the ideals of the legislation. The detail will come later.
The dealer group- Indy Singh,managing director, Fiducian
Win-win:
Anything that helps the stature of the Australian financial planning industry and advisers, and anything that gives us more credibility and adds to the security of clients, I would welcome, no matter how difficult or expensive it is.
I have been in this game a long time, and we have always had a different regulatory regime and different regulators across a range of different products. I think the Government has finally found a solution which will keep all sides happy.
In the end, everyone will win.
. . . except:
If at all, there may be some issues for dealer groups in terms of training.
We have run courses from people like Integratec and others for advisers who we felt needed it or who may not have had the qualifications that were necessary to deal with the introduction of the new legislation.
FSRA score:
Seven out of 10. I think that the only thing that is missing, is a level of cohesion in implementing the new legilsation.
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