ASIC's new corporate plan is out – and it may not surprise you to know advisers feature prominently.
The release of the regulator’s key priorities for the next 12 months comes hot on the heels of multiple reviews and adjustments, including an investigation of insurance in super as well as ETFs, new government funding and expanding intervention powers, new provisions in the professional standards framework and changes to the RG97 fee disclosure regime.
It’s also the first corporate plan ASIC has released since the beginning of the Royal Commission and the replacement of Greg Medcraft with James Shipton as chair. So, what’s new?
A new APL regime
Given some of the headlines generated by the Royal Commission concerning financial advice, it shouldn’t come as much of a surprise that the industry remains a key part of ASIC’s agenda. Two main focus areas for 2018-19 are “poor culture and professionalism” in the provision of consumer credit and financial advice and “misalignment of retail product design and distribution with consumer needs.”
To that end, ASIC is launching a new approved product list (APL) reporting regime, targeting firms that “issue products and provide advice” after the regulator considers “which entities it should apply to, how they will report their data and how we can ensure data is reliable and consistent.”
Improving consistency in products and reporting will be particularly important, ASIC said, in light of the fact that around 9.4 million people indicated they had unmet advice needs in 2017.
Compliance and conflict
Two other new projects focus on conflicted payments and fee disclosure. On remuneration, ASIC said it will be reviewing data on “the extent and aspects of allowable conflicted remuneration” – referring to grandfathered commissions and “conflicted remuneration allowed by FoFA.”
The regulator will also be testing the industry’s compliance with the fee disclosure statement and renewal notice obligations. This will include “reviewing samples of documentation provided to clients by licensees.”
Further initiatives in this area include ongoing projects such as assessing the quality of life insurance advice, fee-for-no-service and the Wealth Management Project which focuses on Australia’s five largest advice firms.
New projects in the super space include the goal of “improving outcomes for superannuation members,” which will entail “boosting supervision of the superannuation sector by strengthening audit and enforcement action to improve transparency.”
Additionally, ASIC will investigate the quality of advice provided to super members by “improving conflicts of interest management for advice provided to existing retail and industry super fund members.” This will involve “advice channels such as advisers employed by or authorized by the fund (or a related entity) and advisers with a referral arrangement with the fund.”
In a statement accompanying the corporate plan, Shipton said ASIC will be focusing on how “industry needs to address systemic issues, such as conflicts of interest. Firms need to ensure they adopt a culture of professionalism and make sure it is cascaded through the entire firm and sector.”
While there have been significant shifts in the regulatory landscape recently, it appears this trend has a long while yet to subside.
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