DBFO tranche 2 falls well short – TAA | Australian Markets

The Government’s publicity draft of the second tranche DBFO laws do little to change to simplify the law or cut back pink tape whereas the introduction of new penalties for each trustees and advisers will act as a additional disincentive to change, in keeping with The Advisers Association (TAA).

In a submission filed with Treasury responding to the publicity draft, the TAA’s chief govt, Neil Macdonald additionally made clear that many of the measures being proposed to cut back the price of advice wouldn’t work with out a commensurate change of strategy on the half of the Australian Securities and Investments Commission (ASIC).

“Compliance requirements being maintained on the file, and not needing to provide all documents to a client unless requested, may seem like a win,” the TAA response stated. “However, in practice the adviser’s regulatory obligations remain the same and they will still have to collate all the information and documents and retain them on the file resulting in little, if any, cost or efficiency savings.”

“In fact, there will be additional costs incurred, for little benefit, by practices and licensees having to change advice policies, processes and systems e.g. all current references to SOAs and that process would need to be found, reviewed and replaced with reference to the new CAR processes, templates, file record policies, etc,” it stated.

(*2*)

The response stated the TAA helps the proposed transfer to report conserving necessities being included into the Corporations Act, as a substitute of in ASIC Corporations (Record-Keeping Requirements for Australian Financial Services Licensees when Giving Personal Advice) Instrument 2024/508.

“This is a optimistic, however small, step in the direction of having all of the related laws simplified and consolidated into one place as really useful by the Australian Law Reform Commission Inquiry into the legislative framework for firms and financial companies regulation.  However, we don’t help the introduction of extra onerous civil penalty obligations to take care of data, which is an pointless value and regulatory impost on financial advisers and licensees.

“In previous submissions and consultation, we have advocated for a less prescriptive approach to the advice documents and a greater reliance on professional judgement, especially for simple advice, in line with Michelle Levy’s recommendations.  We also recognised that unless ASIC was seen to be changing their approach to supervision and monitoring the sector e.g. to reviewing files and imposing severe sanctions and penalties for relatively minor breaches, etc., the risk is licensees will carry on with the more complex, but perceived safer option of documenting everything and providing it to the client, thereby negating any of the benefits of the proposed changes.”

“In conclusion, our members’ assessment of the draft legislation is that the proposed changes in this tranche do little to simplify the law or reduce red tape and the introduction of new penalties for both Trustees and advisers is a further disincentive to change.  They are therefore unlikely to make advice more easily accessible or affordable without the proposed changes that may come with the next tranche of draft legislation,” the TAA response stated.