ASIC releases guidelines for best practice financial advice

Legislation Future of Financial Advice

by Marty Carne, General Counsel

ASIC recently released its Corporate Plan for 2016-17. We have summarised it here for financial advisers.

For the first time, ASIC has described what they want to see in the financial advice space. They say 'good' Financial Advisers:

  • Act professionally, avoid conflicts of interest and treat consumers fairly. 
  • Deliver strategic financial advice that is aligned with consumer needs and preferences.
  • Ensure that consumers are fully compensated when losses result from poor conduct. 

ASIC says key risks they will be focusing on are:

  • Culture and conduct in financial services and credit resulting in poor outcomes for investors and consumers.
  • Misalignment of retail product design and distribution with consumer understanding.
  • Digital disruption.

ASIC Target areas are:

  • Certain reward and incentive structures.
  • Poor recruitment and training processes.
  • Conflict of interest.
  • Complaints handling.
  • Remediation policy and procedures.
  • Corporate governance frameworks to support client centric culture.

Key ASIC Projects for the 2016-17 year include:

  • Fee for no service.
  • Life insurance replacement statement of advice.
  • Review of advice following three years of FOFA.
  • Accountants giving financial advice.
  • Life insurance advice – improving general SOA communication. 
  • Disclosure of fees.

As an Australian Financial Services Licensee it is important that the licensees in the Centrepoint community work with the regulator and anticipate its focus areas.

It is also important for financial advisers to know and appreciate that taking shortcuts when it comes to regulatory requirements is not a good idea, particularly when we all know ASIC is active in our marketplace.