Insights / December 3rd, 2020

ASIC to consult industry on barriers to providing affordable financial advice

ASIC Consultation Paper 332 (“Consultation Paper”) highlights that the number of current financial advisers on the Financial Advisers Register was 21,284 on November 5. This marks a nearly 15% decrease from the long-term average prior to 1 January 2019 – being the date higher standards and education requirements were imposed on financial advisers. ASIC is concerned that the decrease in active financial advisers may make it harder for consumers to receive affordable, high quality financial advice.

On this basis, the Consultation Paper seeks to gather information to help ASIC understand the issues relating to the supply of advice and the impediments that industry participants face when providing high quality, affordable personal financial advice. ASIC referenced its awareness of the consumer demand for affordable advice and that the provision of personal financial advice can help consumers make better financial decisions.

Additionally, the Consultation Paper comments on the provision of limited advice and feedback about meeting the best interest duty and related obligations in conjunction with providing advice of a high quality in an affordable nature. Relevant parties are encouraged to provide feedback on the practical issues and challenges faced when providing limited financial advice to consumers.

The Consultation Paper poses questions for financial advisers, licensees and other stakeholders to answer which intend to identify issues that may contribute to the barriers of providing high quality financial advice that is affordable for Australian consumers.

ASIC has indicated a particular interest in the industry’s experience in providing limited advice, digital (e.g. robo-advice) and strategic advice and ways to make ASIC Regulatory Guide 244 Giving information, general advice and scaled advice and Regulatory Guide 90 Example Statement of Advice: Scaled advice for a new client more helpful.

The Consultation Paper and the link to the online submission form can be accessed here.

Submissions are due by 18 January 2021, with stakeholder roundtables to begin in early 2021.

If you have any questions about how to fulfill your legal obligations in providing personal financial advice or limited financial advice, or if you would like to discuss a submission to ASIC, please contact a member of our Financial Services Team.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional legal advice. You should not act upon the information contained in this publication without obtaining specific professional legal advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication and to the extent permitted by law, Cowell Clarke does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting or refraining to act in relation on the information contained in this publication or for any decision based on it.

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