Raising advice bar may reduce ASIC levy
Lifting professional, education and ethical standards in the financial advice industry could mean the levy to fund the Australian Securities and Investments Commission (ASIC) could reduce for advice businesses over time, according to the Financial Planning Association (FPA).
FPA chief executive, Dante De Gori said the industry funding model, where ASIC’s regulatory costs would be recovered from the entities that create the need for regulation through a direct levy, would inevitably come into effect, but said there were some concerns around equity in terms of how it would apply to smaller licensee businesses versus the larger entities.
But he pointed to the possibility of advice businesses being relieved of the cost pressure depending on how they implemented the new ethical and professional standards.
“One of the things that I think is quite interesting is that the levy will be reviewed on a regular basis depending on ASIC’s activity, in particular in parts of the industry,” De Gori said.
“So again, there’s an opportunity with the professional and education standards and the code of ethics that if we can improve in terms of the quality of advice, in terms of our conduct and behaviour, then in theory the ASIC levy should reduce as a result of less need of ASIC’s time and effort in our industry.”
The Minister for Revenue and Financial Services, Kelly O’Dwyer released draft regulations on the operations of the industry funding model for ASIC in May, after introducing the ASIC Supervisory Cost Recovery Levy Bill 2017 into Parliament in March.
De Gori also warned advisers that in the Future of Financial Advice (FOFA) world, individual advisers would be primarily responsible and accountable for the advice provided despite being part of licensing structure.
“Licensees are there to support you in meeting your obligations but I would encourage you to take more interest and probably a little bit more control in terms of the advice that you provide and not purely just rely on what the compliance teams are telling you,” he said.
De Gori urged advisers to re-examine ASIC Report 515 on how large institutions oversee their advisers, and the checklist that would be used to audit advisers and the personal advice provided.
The criteria includes acting in the client’s best interest, identifying customer objectives and financial situation and needs, and filling any gaps where information is incomplete or inaccurate.
AUTHOR
Malavika Santhebennur
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