- SMSF Association Media Release
The SMSF Association has thrown its support behind the establishment of a single advice disciplinary body, calling it a critical reform for the financial advice sector.
SMSF Association CEO John Maroney says: “We support the policy intent to simplify the regulatory environment for financial advisers. The changes, set to take effect on 1 January 2022, will assist in removing some of the additional layers of complexity around multiple registrations, regulatory bodies and codes.
“It is an important step in raising standards, providing consistency and simplification with the use a single body – the Financial Services and Credit Panel (FSCP) within ASIC. Its role is to monitor, review and where necessary discipline the sector.
“Over time, the FSCP and associated processes will provide greater consumer protection and, in turn, instil a greater level of confidence in the system’s integrity.”
In a submission to Treasury in response to the Federal Government’s consultation draft legislation to implement recommendation 2.10 of the Royal Commission, the Association contended that this important reform should not be the final word on establishing a new disciplinary system for financial advisers.
Maroney says: “We urge the Government to reshape some of the proposed measures, using them as the essential first steps towards broader regulatory reform for the advice sector. Doing so will align the financial advice sector with other professions – the broader policy objective.
“Individual registration of financial advisers and the inclusion of tax (financial) adviser registrations under one umbrella inside ASIC is one such step. These changes will incorporate a fit and proper person test on application and renewal.
“However, registration should be the responsibility of the individual and not their licensees as the draft legislation proposes. This makes it clear that these declarations are a statutory obligation and not a requirement of the licensee. For advisers, the lines between licensee policies and the law often become blurred.”
Maroney says urgent consideration is needed for advisers who registered as tax (financial) advisers based upon specified experience with approved professional body memberships.
“Given the FASEA education standards must be completed by 1 January 2026, transitional measures will be required to ensure these advisers can renew their registrations after 1 January 2022 and continue to provide these services.”
“In our submission we also said it is important that there are clear governance and guidelines to assist industry and consumers understand the role of ASIC and the FSCP in its disciplinary body role. This will be particularly important for the administration of the Financial Advisers Code of Ethics 2019.
“It will also be critically important that ASIC has appropriate resourcing for its new roles and responsibilities to ensure matters are handled efficiently and timely.”
Maroney concludes: “The Association encourages the introduction of consulting panels. These will allow the Minister, Treasury, ASIC and, most importantly, industry to work together to ensure the right outcomes are achieved for all stakeholders.
“Any time there is change, there is an opportunity to reflect and improve. We believe the Government and ASIC should seize this opportunity and look to streamline processes, reduce red tape and unnecessary duplication and complexity.”
Read the SMSF Association Submission on the Financial Sector Reform (Hayne Royal Commission Response – A New Disciplinary System for Financial Advisers) Bill 2021 via the SMSF Association website.