The Australian Securities and Investments Commission (ASIC) has again sidestepped claims that the amendments to the Future of Financial Advice (FOFA) reforms were a negative step and that its current enforcement approach allowed advisers a free hand in complying with the reforms.
The claim was made by Labor Senator Sam Dastyari at public hearings of the Senate inquiry into the performance of ASIC held in Canberra yesterday, at which the Assistant Treasurer Arthur Sinodinos was seated next to ASIC chair Greg Medcraft.
It is the second time in seven days that ASIC was faced with the question of whether the proposed FOFA amendments would be a negative development for consumer protection, with Dastyari pursuing a similar line of questioning at the opening hearings in Sydney last week.
Both Medcraft and ASIC deputy chair Peter Kell repeated their statements of last week, stating that any changes to the legislation were a matter of government policy.
However Kell made the strongest rebuttal from the regulator to date in response to a question by Dastyari that the regulator's facilitative approach to the amendments was a green light for advisers to ignore the FOFA laws.
"Uncertainty in the financial advice sector is the issue and the amendments are adding to it. Why is this (ASIC's facilitative approach) not a green light to ignore all the FOFA laws?" Dastyari said.
"For the obvious reason that the majority of FOFA laws remain unchanged, this is rather a key point," Kell responded.
The exchange was part of a longer discussion in which Dastyari claimed that ASIC's statement of 20 December last year — to act only in the event of serious breaches of FOFA and to take a facilitative approach during the 12 month implementation — was inconsistent with the purpose of the FOFA laws.
He said that ASIC's position regarding the amendments did not recognise the difference between the law as passed by the Parliament and the proposals of the current government.
Both Kell and Sinodinos stated ASIC's approach was consistent with other complex reforms including the credit reforms passed by the previous Labour Government.
While the Senate inquiry was tasked with assessing the performance of ASIC across all areas of its responsibilities, the issue of FOFA dominated much of yesterday's time allotted for ASIC's appearance at the public hearings.
Dastyari pressed Sinodinos on a date for the release of the FOFA amendments regulations and legislation, with Sinodinos stating it would be around the end of May as "they still had to pass through a number of internal processes".
