The FAAA has responded to Treasury’s draft DBFO Tranch 2 legislation by questioning some of the proposed expectations of risk advisers.
One section causing the FAAA concern (947C) states: “…the Client Advice Record must include information about any remuneration (including commission) or other benefits that any of the following is to receive that might reasonably be expected to be or have been capable of influencing the providing entity in providing the advice…”
The industry body considers this clause will require substantial effort on the part of advisers to comply with, stating it is “excessive and unnecessary”.
“The remuneration for the advice will be disclosed as part of complying with s947C(1)(d). We therefore think s947C(2) should not be required.”
See our report DBFO Tranche 2 – Industry Responds
Turning to retirement planning, the FAAA’s response states: “Retirement planning advice will always be complex and costly advice, and should not be provided on a collectively charged basis.
Super nudges should not be provided to superannuation fund members with an external financial adviser…
“Consumer protection is paramount in the provision of super nudges, particularly with respect to retirement planning, and members should be made fully aware of the implications of acting upon these nudges.
“Super nudges should not be provided to superannuation fund members with an external financial adviser, or at least should be subject to a notice to disregard the nudge if they have already obtained financial advice.”
The FAAA states the financial advice regulatory regime should be principles based and permit professional financial advisers to rely upon their professional judgment.
“ASIC guidance and enforcement must reflect this design principle,” states the FAAA.
It also told Treasury the opportunity to use a Record of Advice should be substantially expanded to better enable the use of this streamlined form of financial advice.
“Every effort must be made to sensibly rationalise what needs to be included in an advice document, including with respect to eliminating the prospect of additional obligations being added at a later time through regulation or ASIC guidance.”
Click here to read the FAA’s full submission.
