Advocacy by the FSC, along with the Financial Planning Association of Australia (FPA) and the Association of Financial Advisers (AFA) – to ASIC and the Federal Government has secured valuable clarity on the parameters for electronic renewals of Ongoing Fee Arrangements (OFAs).
In the absence of Regulatory Guidance on the issue, ASIC has provided this clarification in an updated FAQ available here.
While these agreements must be renewed in writing, we now have clarity this can be done electronically and have examples to illustrate this. Verbal messages do not meet the requirements of “in writing” and must be followed up accordingly.
Why is this clarity on only one section of an ASIC FAQ important?
It offers advice businesses vital certainty they are operating lawfully in the new economy which is emerging and meeting their obligations.
The primary function of financial advice regulation has always been consumer protection. It was never intended to hollow out the very industry it regulates. It never contemplated the reality of COVID-19 actually preventing advice businesses and professionals from meeting these very protections, let alone conducting their day to day business as they normally would.
The restrictions on travel and limited capacity for the use of technological alternatives to meet their obligations puts advice businesses and professionals, as it does the broader economy, in a difficult position. One needs to look no further than in Victoria – the home of around 7,000 advice professionals – as an illustration of this.
The situation highlights how the compliance net for financial advice has been caught off guard by the crisis and lacking anticipation of the legal application of technology. Over time industry will be called on more and more to offer innovations and solutions to manage this.
The world of working from home, social distancing, and lock downs is fundamentally re-imagining the client-adviser relationship. Day by day, week by week, we are learning this world is not going away. It’s why we are working closely with our members and other advice associations on solutions we can offer Government and Regulators to support our industry and the broader economic recovery.
Our proposals to free up access to scaled advice through the use of Records of Advice, as well as our system-wide view of the advice system in the form of the Future of Advice report to be released in October – is just the start of this work.
The input of our members with specific examples, case studies and evidence is crucial. Doing so will support decision-makers to reconfigure the post-COVID-19 regulatory net so that it reinforces rather than roadblock economic stability, jobs and maintained access to services consumers rely on.