The government cannot stop tweaking the rules for financial planners and the latest tweak has really divided the industry.
ASIC issued a guidance and class order relief enabling superannuation fund trustees to provide simple advice relating to a member’s existing interest in a superannuation fund.
The guidance was met with mixed reactions. FPA head Jo-Anne Bloch said it threatened the superannuation of millions of Australians by taking the role of advice away from licensed professionals.
Bloch said she could not understand why trustees were able to provide advice without a reasonable basis, and therefore escape criminal sanction, simply because the advice related to a few scenarios within a superannuation environment.
On the other hand, Association of Superannuation Funds of Australia chief executive Pauline Vamos welcomed the relief, saying it was a victory for commonsense.
For too long, fund members had not had access to specific and simple guidance about choices within their own funds, Vamos said.
The Investment and Financial Services Association (IFSA) weighed in with its opinion that it would give investors what they wanted – financial advice. IFSA chief Richard Gilbert said that while the class order relief was a step in the right direction, it did not go far enough.
Gilbert said he would like the relief to move outside superannuation where there was also a need to make financial advice more accessible.
Perhaps the good news is cheap advice for investors. With the new rules they now have access to cheap and affordable advice, albeit limited, through their industry funds. And this seems to have been a goal of the government for some time.
For years, however, financial planners have been keen to offer cheaper advice, which they say is difficult because of the regulatory obligations they face. The relief from 945A, which is the Corporations Law requirement to have a reasonable basis for the advice, is indeed a cost saving for the provider of advice. For financial planners who have not been given that relief it puts them at an unfair disadvantage on an uneven playing field.
Many believe they too could provide low-cost advice with the removal of 945A. And now, one group of people are allowed to provide this without having to take into account the 945A ruling, while another group is forced to live with it.
According to others, in theory this is a good move by ASIC and the government but there is now a requirement to monitor it and make sure it doesn’t get abused.
How the announcement will ultimately affect the business of a financial planner is yet to be determined.
Once again, the rule, though clearly meant to be simple, has added more complexity into an already complex system.
