Between February 1 and May 31, the Australian Securities and Investments Commission (ASIC) received 875 applications for relief from various requirements under the Corporations Act 2001, National Consumer Credit Protection Act 2009, and the National Consumer Credit Protection (Transitional and Consequential Provisions) Act 2009.
Of these, 425 were granted, 72 were withdrawn and just 25 were refused, while the remainder were not decided within the period, ASIC said in its Overview of decisions on relief applications report.
In releasing the figures, ASIC provided a number of examples to highlight its decision-making processes in an effort “to improve the level of transparency and the quality of information available about decisions we make when we are asked to exercise our discretionary powers to grant relief from [regulatory] provisions”.
Among the examples in which ASIC granted relief were an over-the-counter derivatives issuer, exempted from AFSL requirements because it was prudentially regulated in the UK in a manner similar to Australian Prudential Regulation Authority regulation here.
ASIC took a limited no-action position in response to a request for relief from conflicted remuneration requirements from an AFS licensee whose advisers accept commissions only in relation to technical features of the licensee’s non-cash payment facility for payments from customers through the facility and a related deposit product, and how to integrate those features into the clients’ websites.
The regulator took the view that commissions in this case would not create a misalignment between advisers and clients because the commissions were designed to improve service levels.
However, ASIC refused a separate request for relief relating to conflicted remuneration provisions where adviser groups were providing advice both to employers and employees in relation to default super.
The agreement involved a service fee being paid by the employer, while a separate service fee was paid by the super fund’s administrator where advice services were provided to an employee.
ASIC took the view the advice may be influenced by the fee because the adviser may be asked to provide advice services to the employees of the relevant employer in return for the payment of a service fee.
“This is the mischief that the conflicted remuneration provisions were designed to prevent,” ASIC stated in its report.
Speaking at a Finsia event earlier this week, ASIC Senior Executive Leader of the Financial Advisers, Louise Macaulay, said around 15 no-action applications have been received since July 1 – mostly in relation to fee disclosure statement requirements and conflicted remuneration.
The no-action applications have a breach report attached to them, but aside from those breach reports Ms Macaualy said she is not aware of any breach reports specifically related to Future of Financial Advice (FOFA) changes, suggesting it is “simply too early”.
“In the first year of operation of FOFA, we are in a situation where there are systems changes, and where there are inadvertent breaches we will take a measured approach as we understand there has been a lot of work to do, particularly with regard to IT systems, so where people have been making reasonable efforts we will be measured where issues have arisen,” she said.
