In its latest submission to the Australian Law Reform Commission’s (ALRC) Review of the Legislative Framework for Corporations and Financial Services Regulation, the Financial Planning Association of Australia (FPA) has suggested financial advice regulations are prioritised for transitioning to the ALRC’s proposed structure of the legal requirements based on thematic rulebooks.
The ALRC package of proposals aims to improve navigability of the law and remove duplication under a new legal hierarchy of:
- Principles-based legislation
- Scoping order – consolidated exclusions and exemptions; and
- Thematic rulebooks.
FPA Chief Executive Officer, Sarah Abood, says: “The proposal is in line with FPA’s long-held position that the legal obligations placed on individual financial planning practitioners should be separated from the requirements that apply to AFS licensees and product providers.
“The ongoing dialogue between the ALRC, the FPA and the financial services sector more broadly, continues to be a constructive demonstration of the ALRC’s willingness to understand the excessive burden created by the current regulatory framework on all users of the corporations and financial services laws.”
She says the ALRC’s Review complements the Quality of Advice Review (QAR) led by Michelle Levy, with both reviews considering equally vital and distinct elements of the corporations and financial services laws applicable to the provision of financial advice.
“Financial planners are faced with regulatory duplication created by both the structure of the legislative hierarchy and the obligations contained in the financial advice-related provisions. This significantly and negatively impacts the affordability and accessibility of financial advice for consumers.”
Abood notes that the Corporations Act contains duplicated requirements applying to the individual planner, either directly or via obligations placed on the licensee.
She says that both the ALRC and QAR reviews highlight that duplications in the law exist on two levels:
- unnecessary repetition of identical provisions such as those identified in Interim Report B; and
- specific obligations placed on the same provider through multiple applications of ‘like’ obligations, such as the financial advice requirements on financial planners.
“This duplication is made worse, as the obligations placed on financial planners under the Corporations Act 2001 licensee obligations, and the Financial Planners and Advisers Code of Ethics 2019, are heavily influenced by the licensee and others who often then apply additional requirements to financial planners.”
Abood says the ALRC package of proposals is vital to the success of the recommendations of the Quality of Advice Review.
“The financial planning profession has continued to deal with the impact of this issue in all elements of operating financial advice businesses and providing advice to help clients under the requirements Chapter 7.
“We are keen to see the ALRC prioritising recommendations relating to financial advice in its Final Report to Government, and include its considerations for the implementation of its recommendations and proposed legislative hierarchy by Government, Parliament, and regulators.”