Australia's financial advisory sector may face a new level of regulation with growing speculation the ASIC professional advice codes could lead to the formation of a new financial planning standards body.
While it is public knowledge that representatives of the government held talks with members of an industry advisory panel in April last year, InvestorDaily understands the details of those discussions, including those pertaining to a new standards body, are contained in a classified government document.
A spokesman for the Minister for Financial Services and Superannuation, Bill Shorten, confirmed such meetings were held, though did not comment on the existence of the document or its contents.
"The details and membership of the advisory panel were announced by Minister Shorten on 24 November 2010. The panel was chaired by ASIC chairman Mr Greg Medcraft, and included senior representatives from across the financial services industry as well as consumer, academic and employee representatives," Shorten's spokesman told InvestorDaily.
"The panel's work has contributed significantly to the development of the FOFA reforms and the government is continuing to review its findings, particularly in the light of ASIC's current work on codes of conduct.
"The government will respond to the outcomes of the panel's work in due course."
In response to whether Australia's financial advisory sector should have a standards body, Association of Financial Advisers (AFA) chief executive Richard Klipin remained cautious.
While on the one hand he believes discussions on a new body seem like an "appropriate" way to approach changes in reform, the issue is "yet to play out".
"I'm hopeful a common sense approach will prevail," he said.
Henry Davis York partner Liz Gray said a new standard's body is a possibility.
"It might be we have a new financial advice body out of this that is a standard making body, that is a possibility as well," Gray said last month.
"I haven't particularly heard that but when the industry changes we do see changes in the industry bodies and we saw that over the years with what is now the Financial Services Council (FSC), which includes the [Trustee Corporations Association of Australia (TCAA) ] joining that. So you do see changes."
Gray said in her view, the government is trying to drive the industry towards a professional association.
"Like we see with lawyers and accountants, we're seeing that in the advice space as well, just really lifting professionalism and the standards that they apply to hold themselves out as advisers," she said.
In March this year, eight private trustee companies and eight Public Trustees became full members of the FSC following the disbanding of the TCAA.
Last week, ASIC commissioner Peter Kell detailed ASIC's next steps in terms of its advice reform code.
ASIC expects the FOFA code to address specific industry issues and consumer problems not covered by legislation, and elaborate on legislation to deliver additional benefits to consumers.
It is also expected to clarify what needs to be done from the perspective of a particular industry or practice or product to comply with the legislation.
The code was also expected to contain binding rules and be enforceable against code subscribers through contractual arrangements, Kell said.
The code must also be developed and reviewed in a "transparent manner", involving consultation with relevant stakeholders and consumer representatives, he said.
It must also have effective administration and compliance mechanisms, he said.
He said at this stage, the regulator expected its consultation paper would include details on appropriate content of a code submitted for approval, including methods to preclude the need for opt-in.
It will also include administration, governance, monitoring and enforceable codes as well as details surrounding ASIC's approval and relief process.
