Both bodies warmly welcomed the changes made to the original Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016.
They emphasised the “sensible approach” taken in the revised draft; in particular, “the more practical time frames for existing financial planners to meet the new requirements”.
AFA and FPA also encouraged the incoming government to prioritise the passage of the legislation through parliament.
Despite their strong support of the changes already made, however, both associations took the opportunity to suggest further amendments.
For the most part, both organisations requested similar changes.
Responsibility for advice
Provisional advisers must be supervised for a year by an appropriately qualified person who must approve in writing any statement of advice provided to a retail client.
Both AFA and FPA have requested clarification on who then assumes ultimate responsibility for the advice given and whether or not the provisional adviser should also be held to account.
FPA suggests, that where advice is deemed to not have been in the best interest of the client, it would be appropriate for action to be taken by the Australian Securities and Investments Commission (Asic) against the supervisor for allowing inappropriate advice to be given; including enforceable undertakings, fines, or banning orders.
While they feel it would be inappropriate to penalise the provisional adviser, it might be appropriate to extend their supervision year and require them to get a new supervisor.
Breaches of the code of ethical conduct need to be investigated within 90 days. While both associations have similar timeframes for their own codes of ethics and standards, both have suggested greater flexibility is needed as there are instances where the investigators face mitigating factors, such as non-compliance by those accused of the breach.
Where a hearing is required to implement sanctions, FPA states that this would take significantly longer than 90 days.
AFA concurs: “If a recalcitrant or uncooperative respondent to an investigation is unwilling to provide requested information or assistance. It is conceivable that a full investigation will not be able to be completed in the 90-day timeframe…”
One area in which the two associations differ is mandatory membership of a professional association and subscription to their code compliance monitoring scheme for provisional advisers, as advocated by AFA but not by FPA.