The report was commissioned by the Financial Services Council (FSC) to inform the lobby group’s submission to the Senate Economics Legislation Committee, which is currently conducting an inquiry into the FOFA amendments.
Deloitte compared the regulatory framework affecting retail personal financial advice in Australia with the United Kingdom, the United States, Canada, Singapore and Hong Kong.
“The comparisons show that overall Australia has a higher standard of regulation with more prescriptive requirements than the other countries studied,” said the report.
The report found that the UK regulatory framework was the “most comparable to Australia”, and the US the “least comparable”.
“The licensing requirements at both an organisational level and individual adviser level are comparable to Australia across jurisdictions in scope, except for the USA, where the requirements are less prescriptive,” said Deloitte.
While each of the five regimes analysed imposes statutory duties on the providers of financial advice, only the UK has a duty that is comparable to Australia, said the report.
“Australia and the UK are the only jurisdictions considered in this study to prohibit conflicted remuneration in certain circumstances,” said Deloitte.
Australia and the UK are also the only jurisdictions that require specific disclosures (including client objectives and advice recommendations) to be documented for the client at the time of providing financial advice, said the report.
“The UK’s ‘suitability letter’ requires less fulsome disclosure than a Statement of Advice, and is only required for certain packaged products,” said Deloitte.
All jurisdictions have conflict of interest requirements “to some degree”, and all require advisers to disclose to clients information that is somewhat comparable to the information disclosed in an Australian Financial Services Guide, said the report.
