MAGAZINE OF CHOICE FOR AUSTRALIA’S WEALTH INDUSTRY
www.moneymanagement.com.au
Vol. 34 No 21 | November 19, 2020
20
ETFS
Using ETFs in retirement
EQUITIES
26
Opportunities for income
Small business taxes
ASIC claims its tough adviser enforcement builds consumer confidence
YEAR WRAP
BY MIKE TAYLOR
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2020 – a year of incidents and challenges IF 2020 is to be remembered for anything in the financial planning industry then it will be as the year in which a global pandemic hastened inevitable change including the increased adoption of technology and the continuing exit of financial advisers. What it also revealed, however, was the reality that the industry had become mired in regulatory red tape which was capable of being pulled aside by a Government and financial services regulators keen to ensure that the clients of financial advisers were not needlessly inconvenienced and disadvantaged as a result of lockdowns, particularly in Victoria. But, beyond the COVID-19 pandemic, what are the events which will be seen as having marked 2020? • IOOF acquired the MLC Wealth business; • AMP Limited was the subject of an adviser class action, the controversial exit of its wealth chief executive, Alex Wade, the consequent exit of its chair, David Murray, a sexual harassment scandal around its chosen chief executive for AMP Capital, Boe Pahari, and then a takeover bid; • Iress acquired OneVue; • More than $35 billion was withdrawn from superannuation under early release arrangements; • The chair of the Australian Securities and Investments Commission (ASIC), James Shipton, stood aside amid an expenses scandal. His deputy, Daniel Crennan, first stood aside and then announced his resignation; • The Financial Adviser Standards and Ethics Authority (FASEA) financial planning exam continued to generate 79% to 88% pass rates but dissent continued around its code of ethics; and • The Australian Securities and Investments Commission (ASIC) started its review of the Life Insurance Framework.
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TOOLBOX
Full feature on page 14
CONSUMERS are more likely to trust financial advisers if they know that the regulator is ready to enforce the law and hold those advisers to account, according to the Australian Securities and Investments Commission (ASIC). Asked whether its approach was too punitive and whether the regulatory framework was focused on prosecuting wrongdoers rather than encouraging and supporting good outcomes for consumers, ASIC chose to defend its approach even though it acknowledged there was a concerning lack of access to affordable quality advice. Answering questions on notice from NSW Liberal backbencher, Jason Falinski, ASIC claimed it was working constructively with
Government and the advice industry to enable access to affordable quality advice for Australian consumers. “We recognise that a lack of access to affordable, quality financial advice is a concern,” it said. “This is why we are currently undertaking a project on unmet advice needs, which will look at what impediments industry is facing in providing affordable and limited advice to consumers.” “The project aims to identify what steps industry and/or ASIC can take to overcome these impediments. We also believe that consumers are better able to rely on and trust the financial advice industry if they see a regulator that consistently enforces the law and Continued on page 3
ASIC’s consumer panel advised on FASEA code submission FINANCIAL advisers are pointing to the involvement of members of the Australian Securities and Investments Commission’s (ASIC’s) Consumer Advisory Panel in the formulation of a code of ethics submission to the Financial Adviser Standards and Ethics Authority (FASEA) as highly concerning. The concern of the financial advisers has been driven by the fact that the ASIC Consumer Advisory Panel includes representatives from consumer groups CHOICE and the Consumer Action Law Centre (CALC), both of which also had representation on the board of FASEA. A submission developed by two Griffith University academics, Dr Hugh Breakey and Professor Charles Sampford notes on the bottom of page one that “this submission was developed with input from members of ASIC’s Consumer Advisory Panel. It also Continued on page 3
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