The FPA is suggesting financial advice regulations are prioritised for transitioning to the Australian Law Reform Commission’s proposed structure of the legal requirements based on thematic rulebooks.
It makes the suggestion in its latest submission to the ALRC’s Review of the Legislative Framework for Corporations and Financial Services Regulation.
A statement from the association explains that the ALRC package of proposals aims to improve navigability of the law and remove duplication under a new legal hierarchy of:
- Principles-based legislation
- Scoping order – consolidated exclusions and exemptions
- Thematic rulebooks
FPA Chief Executive Officer, Sarah Abood, says the proposal “…is in line with FPA’s long-held position that the legal obligations placed on individual financial planning practitioners should be separated from the requirements that apply to AFS licensees and product providers.”
She adds that the ongoing dialogue between the ALRC, the FPA and the financial services sector more broadly, “…continues to be a constructive demonstration of the ALRC’s willingness to understand the excessive burden created by the current regulatory framework on all users of the corporations and financial services laws.”
Abood states that the ALRC’s Review complements the Quality of Advice Review led by Michelle Levy, “…with both reviews considering equally vital and distinct elements of the corporations and financial services laws applicable to the provision of financial advice.” (See: Retain Risk Commissions – QoA Review).
…financial planners are faced with regulatory duplication…
“Financial planners are faced with regulatory duplication created by both the structure of the legislative hierarchy and the obligations contained in the financial advice-related provisions. This significantly and negatively impacts the affordability and accessibility of financial advice for consumers.”
Abood notes that the Corporations Act contains duplicated requirements applying to the individual planner, either directly or via obligations placed on the licensee.
She says that both the ALRC and QoA reviews highlight that duplications in the law exist on two levels:
- Unnecessary repetition of identical provisions such as those identified in Interim Report B
- Specific obligations placed on the same provider through multiple applications of ‘like’ obligations, such as the financial advice requirements on financial planners
She says that this duplication “…is made worse, as the obligations placed on financial planners under the Corporations Act 2001 licensee obligations, and the Financial Planners and Advisers Code of Ethics 2019, are heavily influenced by the licensee and others who often then apply additional requirements to financial planners.”
…the ALRC package of proposals is vital to the success of the recommendations of the QoA Review…
Abood says the ALRC package of proposals is vital to the success of the recommendations of the QoA Review.
“The financial planning profession has continued to deal with the impact of this issue in all elements of operating financial advice businesses and providing advice to help clients under the requirements Chapter 7,” she says.
The FPA is “…keen to see the ALRC prioritising recommendations relating to financial advice in its Final Report to Government, and include its considerations for the implementation of its recommendations and proposed legislative hierarchy by Government, Parliament, and regulators,” she adds.
The Corporations Act grew from 400,000 words to 800,000 words.
The sheer volume and complexity of laws and Regulations that for everyone, except specialist Lawyers, is an impenetrable maze and was the catalyst for the absolute chaos and insanity that ensued, with mass Adviser walk outs, the cost of Financial Advice dramatically rising, Insurance Advisers now becoming an endangered species and holistic Advisers scoping out risk advice for new clients and only doing Insurance work for existing clients, who are disgruntled about their Insurance premiums doubling, which could jeopardize the Investment work the Adviser provides, if not resolved.
We can only hope that the ALRC understand that the amount of words, is not as important as the hidden traps that lie within them.
Tinkering with Legal wording and consolidating, without reducing the inherent risks faced by Advisers, Advice Practices and Licensees, will achieve nothing.
If the perception is that the risks remain, then so will the complex documents / SOA’s.
Fees will continue to rise and as has been stated thousands of times, the Life Insurance Adviser community will stay in a state of flux.
The Western world has become a place where the Industries that actually produce stuff and keep the economies turning, are being smothered by a growing army of Non producers who inhibit the producers ability to work, which is self-evident when you look at what has occurred in the Financial services sector.
Comments are closed.