ASIC expects to release final guidance material on the government's Future of Financial Advice (FOFA) reform by September this year.
As part of an ASIC oversight discussion with members of the Parliamentary Joint Committee on Corporations and Financial Services late last month, ASIC senior executive leader John Price revealed details of the corporate regulator's planned FOFA guidance, specifically best interest duties, scaled advice, conflicted remuneration provisions and the licensing and banning powers.
ASIC plans to release its consultation papers to the market place before 1 July 2012, with final guidance set for September, Price told the committee.
"Typically, we would like to provide around an eight-week consultation period for reforms of this size," he said.
"I think you are better off allowing a longer consultation period to give people time to raise the issues and think about the consequences that might flow from any particular policy development.
"After that, you will probably need another couple of weeks for ASIC staff to be able to assess those submissions, pull together recommendations and options for the relevant decision making forum in ASIC.
"Then you would need another couple of weeks to finalise any documents and get them out. So, realistically, my aim would be to get final regulatory guides out by September."
PJC committee member and Senator Sue Boyce questioned Price over how ASIC planned to include the best interest test in its guidance, particularly in light of evidence to the committee during its FOFA inquiry.
Submissions to the PJC labelled the best interest test of the client as a "woolly concept", and "a not terribly well-defined concept", Boyce said.
"Perhaps they were referring to the catch-all provision in the safe harbour to the best interest test. There is an obligation that says someone providing financial advice needs to act in the best interest of their client and then there is what I would call a safe harbour, that says if you do a number of factors then you are taken to meet the test," Price said.
ASIC intends to compile a list of "indicative, not prescriptive" factors that people should be considering in terms of clients' best interests and perhaps provide some examples, he said.
"I made this point during the FOFA inquiry as well: it is important to recognise that those sorts of general type obligations are not uncommon in the Corporations Act."
In offering further comment in response to Boyce's questioning, ASIC commissioner Peter Kell said one of the central features of the corporate regulator's guidance documents was including practical examples.
"That will be a central part of how we answer some of the queries and concerns that industry participants have in this area," he said.
"For example, one of the key issues is how to best deliver scaled advice while also satisfying the best interest test?"
"That is going to be one of the issues that we will explore with some practical examples - how to make sure that any limitation on the advice still works in such a way that it is in the best interest of the client. Those are the sorts of things we will be addressing quite directly."
Late last month, the lower house of Parliament passed the FOFA reforms. The reforms are expected to be debated in the Senate next month.
