Product intervention power will increase cost of advice
Handing the Australian Securities and Investments Commission (ASIC) product intervention powers could end up restricting advisers as a result of licensees limiting the number of offerings on approved product lists (APLs), according to the Association of Financial Advisers (AFA).
In a submission filed with the Treasury this month, the AFA said it was concerned that the impact of this legislation would be a reduction in the breadth of APLs as licensees sought to avoid the unnecessary complexity that would arise in having a broad APL and where an adviser might want to recommend a non-approved product.
“The impact of this is a reduction in competition and choice for consumers,” it said.
The AFA also expressed concern about the manner in which the proposed product intervention power would impact the cost of providing financial advice, particularly where record-keeping and other administrative obligations were concerned.
“We note that the Regulatory Impact statement demonstrates a cost to business of $94.7 million, which is a significant reduction on the $239 million set out in the December 2017 version,” the submission said.
“We remain disappointed that there is a total lack of detail in terms of the breakdown of this $94.7 million and we are concerned that the majority of it will sit with distributors and financial advisers in particular,” it said.
The AFA said the cost increase from the legislation would come on top of a number of other recent regulatory-driven increases which would impact upon the cost of providing financial advice to Australian consumers and would therefore negatively influence access to financial advice for average Australians.
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
