1 / 14

Current Regulatory Landscape and FASEA Professional Standards

Stay updated on the current regulatory landscape and FASEA professional standards in the financial advisory industry. Learn about FASEA requirements, code of ethics, ASIC reports, limited license for accountants, and more.

beauvais
Download Presentation

Current Regulatory Landscape and FASEA Professional Standards

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. MGI Conference • Aura Wealth Pty Ltd • ABN 34 122 486 935 AFSL 380552

  2. AGENDA • Current regulatory landscape • FASEA Professional Standards • Education • Code of Ethics • ASIC Industry Funding Model • Accountants limited licence • Increasing the accountability of financial product issuers and distributors • ASIC • Report on conflicts in vertically integrated firms • ASIC Wealth Management Report • Best Interest Duty prosecutions • Advice solutions for MGI

  3. Current regulatory landscape Removal of license exemption for Accountants, replacement with Limited License and subsequent ASIC surveillance ASIC Industry Funding Model ASIC Reports – Report 499: Fees for no service; Report 562: Conflicts in Vertically Integrated Firms FASEA Professional Standards – Education and Code of Ethics Royal Commission into Misconduct in Banks, Superannuation and Insurance Case Law and prosecutions on Best Interests Duty

  4. FASEA – Professional Standards 1 2 3 4 5 Need to comply with the Code of Ethics and appoint an independent body to monitor compliance All financial advisers need to sit and pass an exam to continue providing advice Existing Advisers need to do a post graduate degree (AQF 8 or above) or bridging course Limitations on who can use the term Financial Adviser New Advisers must have an approved degree (AQF 7 and above) and do a supervision year

  5. FASEA Professional Standards

  6. Code of Ethics and compulsory monitoring

  7. FASEA Professional Standards Timeline Failure to meet the FASEA requirements by the due dates will mean that an individual will no longer be a financial adviser/planner and would be required to enter the industry as a new adviser.

  8. ASIC Industry Funding Model We estimate the fee per adviser would be approximately $850

  9. Accountants limited licence

  10. Accountability of financial product distributors – new legislation coming Aim ASIC power Obligations for the design and distribution of products Royal Commission concerns • Issuers will be required to (for retail clients): • Identify target markets for their products • Select appropriate distribution channels • Periodically review arrangements • Implement controls • ASIC has the power to intervene in the distribution of a product where it believes there is significant risk of consumer detriment, including: • Requiring amendment of marketing and disclosure • Imposing consumer warnings and labelling changes • Restricting how a product is distributed • Banning products to ensure that financial products are correctly targeted and sold to the appropriate consumers. Where this has been breached, ASIC will have the power to intervene in the distribution of the product. • Misconduct in the banking, superannuation and financial services industry: • Introduction of design and distribution obligations on issues and distributors • Product intervention power for ASIC • Source: Legal framework for the provision of financial advice and sale of financial products to Australian households, background paper 7, professor Pamela Hanrahan, April 2018.

  11. ASIC report: Conflicts in vertically integrated firms • ASIC concerns in big 5 • that clients were receiving non-compliant advice • the financial position of these clients • How they manage conflict of interest of providing personal advice to retail clients and manufacturing financial products. • Steps previously taken to reduce conflicts - FOFA reforms: • Ban on conflicted remuneration • Obligation to act in the best interest of clients • Opt-in obligation to renew ongoing fee agreements every 2 years • A requirement to provide an annual fee disclosure statement Deals with advice businesses that offer financial advice and also manufacture financial products - Vertically integrated business models give risk to conflicts of interest • Out of the client files reviewed • 75% of advice was non-compliant • 10% raised concern for the potential impact of the customers financial situation • Steps ASIC is taking to improve the quality of advice: • Improvements to monitoring and supervision • Improvements in advice processes • Banning advisers with serious compliance failings • Remediation where necessary • 2 areas in where customer files ‘failed, the adviser: • Did not sufficiently research or consider the customer’s existing financial products; and/or • Based all judgements on the customer’s relevant circumstances. FASEA will also aim to improve the quality of advice and ethical behaviour of advisers across the industry • Source: REPORT 562: Financial advice: Vertically integrated institutions and conflicts of interest

  12. ASIC wealth management report Compensation payment update – for failing to provide general or personal advice to customers while charging them ongoing advice fees Source: ASIC – Compensation update: Major financial advisory institutions continue refund programs for fees-for-no-service, May 2017

  13. Best Interest Duty prosecutions by ASIC Financial advice firm to pay $1 million penalty for breach of Best Interests Duty Who Who breached? The breach Legislation breached Penalty ASIC deputy Chairman s961B of the Act by failing to take reasonable steps to ensure that they provided advice that complied with the best interests obligations; and s961G of the Act by failing to take reasonable steps to ensure that they provided advice that was appropriate to its clients. breaches of the best interests duty - clients were commonly sold insurance and advised to roll over superannuation accounts that committed them to costly, unsuitable and unnecessary financial arrangements Civil penalty of $1 million + $100,000 ASIC costs. First civil penalty imposed on a financial services licensee for breaches of the best interests duty “This outcome makes clear to the industry the serious consequences of financial services licensees failing to comply with their FOFA obligations.  ASIC will continue to pursue licensees who fail to do so.” Civil penalty Melbourne-based financial advice firm NSG Services Pty Ltd (currently named Golden Financial Group Pty Ltd) (NSG) of $1 million What Law Penalty ASIC

  14. Advice solutions for MGI What type of advice do you provide? Depending on what you currently and want to do in the future will determine the solution we can provide to you. • Financial Planning • Super Investments • Establish SMSF • Super Contributions Internal services can provide additional services you don’t want to advise on Dual signing of advice to cover areas you do not want to do + Referrals to other advisers to cover areas you don’t want to advise on Dual signing of advice to cover areas you do not want to do

More Related