ASIC has released its much anticipated guidance paper on financial services codes of conduct. The paper includes a proposal to consider limited scope codes that exist simply to obviate the need for opt-in.
The limited scope code is one of eight proposals issued by the regulator in a consultation paper (CP 191) detailing how it will approach the approval of codes of conduct under the Future of Financial Advice (FoFA) reforms.
ASIC says it recognises that the opt-in requirement is intended to achieve specific outcomes (ie: to ensure that disengaged retail clients do not pay ongoing fees for little or no service) and therefore proposes that it will consider the approval of codes where the scope is limited to provisions that obviate the need for members to comply with the opt-in requirement.
The consultation paper also provides examples of content that may obviate the need for opt-in. ASIC said that its approach will be principally guided by the original opt-in policy objectives. These examples include:
- Allowing a longer period for clients to opt-in
- Banning ongoing asset-based or volume-based fees
- Regular communication to clients of their right to opt-out of the service
Other key proposals contained in the consultation paper include:
- The consideration of whether codes may be submitted for approval by single licensee or dealer group
- The need for code administrators to maintain a public register of subscribing members who are exempt from the opt-in requirement
- A change to the frequency of independent reviews of approved codes
- That all codes will need to be written in language that the general public can understand
- The need for administrators to notify ASIC if a person’s code membership is terminated
ASIC Commissioner, Peter Kell, invited all industry participants to engage in the consultation process.
“We encourage advisers, industry code representatives and consumer representatives to have their say, and are particularly interested in feedback about whether ASIC should modify its existing approach to defining what is a code in RG 183 for a FoFA code,” he said.
Submissions are open to the public until 3 December 2012.
Click here to view a copy of the consultation paper.
What a WOFT!!!!!!!!!!!!!!!!
I wonder if solicitors, accountants, doctors and others delivering services to the public are required to provide written information ‘in language the public understands’. ‘The public’ is pretty broad – some people can interpret Einstein in his prime, others are flat out understanding Enid Blyton in hers!
Surely the government with all of these reforms has gone beyond what’s needed to make our industry work. It may appear good for the public, but isn’t it disadvantaging those who deliver the services and still try to make a living in it?
With regard to provide “regular communication to clients of their right to opt-out of the service”. Are the government going to make further regulations for all businesses to regularly tell their clients of their right not to deal with suppliers of goods and services: the telcos, the internet providers, our newsagents. Is Peter Kell going to inform the government regularly of their right to sack and stop his pay?….Are these politicians going to regularly inform us of our right to not vote for them. Most businesses are free to market their goods and services in a positive manner….why not us?
This is stupid. How far will it go? FOFA started out as discussion on how can financials services advice be provided to the wider community. It is now an agenda for our current government to screw the small businesses trying to make a living in it. These businesses already provide good advice to their clients and dont need more red tape as this benefits the knobs making these decisions and not the wider community.
Vote them out ASAP, we despirately need some common sense to find a voice!
This all started to prevent the crooks out there and will have absolutely no effect on them.
Hey Mr client- do you “really” want to pay for service? Really?? You know you dont have to,so really, really?
Ok I think I’m getting all this new fangled stuff now. First we had the Know Your Client Rule which seemed a great idea. Now we have the Don’t Know Your Client rule which is “scaled advice.” We also soon will have to write to our clients each couple of months inviting them to opt out. Sort of like shoving them away – This no doubt will be called the “Don’t Really Want You Rule.” Yep, all pretty sensible stuff designed by idiots who have no idea what goes on in the relationship between adviser and client. When is the poor client going to be allowed a say in what he/she wants from the relationship? I mean there’s so many letters coming into the press every day from disenchanted suffering clients. Isn’t there? Isn’t there? Merv Gay
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