Reform agenda defuses SOA row
The Boutique Financial Plan_ning Principals Group (BFPPG) has emerged as an indirect ben_eficiary of the Federal Govern_ment’s plan to streamline dis_closure requirements in the financial services sector.
The plan has led to a truce in an ongoing dispute between the BFPPG and the Australian Secu_rities and Investments Com_mission (ASIC) over the regula_tor’s interpretation of compli_ance under the ‘incorporation by reference’ regulation.
Conciliation came in the form of an apparent gentleman’s agreement by ASIC not to force the BFPPG to change its rec_ommended Statements of Advice (SOA) for long-term member clients to comply with its interpretation of the recent Financial Services Reform (FSR) regulation.
The agreement was sealed in an informal discussion between ASIC director of compliance and financial services Darren Williams and BFPPG compli_ance and FSR committee chair_man Bruce Baker.
The discussion occurred last month at a Financial Services Consultative Committee meet_ing in Brisbane, hosted quarterly by ASIC to allow financial serv_ices industry representatives to discuss relevant issues.
According to Baker, also prin_cipal of Brisbane-based finan_cial planning firm Puzzle Finan_cial Advice, Williams said ASIC “would not be interested in tak_ing action as long as our (BFPPG member) clients were not harmed”.
“I guess we agreed that while we have a difference of opinion on the interpretation of the reg_ulation, the whole thing had become a non-issue (as a result of the proposed changes).”
Previously, ASIC had been intent on forcing the BFPPG to change its rec_ommended SOAs for mem_bers “giving regular and ongoing investment advice to clients”, he said.
Equally, he added, the BFPPG had been deter_mined to resist ASIC’s inter_pretation that the regulation “requires us to specifically cross-reference all other documents that might be required to make this (type of) SOA compliant”.
Before the launch of the regulation last year, the BFPPG had simply included a heading at the top of these SOAs explaining “we real_ly expected each new piece of advice to be treated (by clients) in the context of the whole”.
We felt this was the only practical way of providing very short pieces of advice to a long-term client that they would read, Baker said.
AUTHOR
Mike Taylor
Recommended for you
Insignia Financial has reached a major milestone in completing the separation of MLC Wealth from NAB, having acquired the firm back in 2021.
There could be changes ahead for how ASIC requires licensees to handle conflicts of interest as the corporate regulator announces it will be meeting key stakeholders next year to update guidance.
Proper recordkeeping has been described as the “mortar between the bricks” of the advice process and critical to an FSCP decision as an adviser is suspended for failures in this area.
As investors increasingly seek to embed ESG considerations in their portfolios, a specialist adviser has offered tips for financial planners who may feel overwhelmed in tackling these complex topics with clients.
