AMA: I'm Phil Anderson, GM Policy, Advocacy & Standards at FAAA, Ask Me Anything!

Thanks again ShwetaM1. I will say at the outset that I am a big fan of standardisation and technology enabled solutions. This should apply broadly across the financial services industry. It might be that we need some kind of data standard, so that we are all speaking with the same language. I think that this needs to cover issues like fee consent forms and third party authority forms.

Having mandatory standardised forms is one thing. Ideally however the best outcome is to do this in a technology enabled way. I would like to see a world where clients can provide third party authorities through an app on their phone and can dot the same thing for fee consent. This should be backed up by straight through processing, where the message is sent to all relevant product providers. We can only dream about what might be possible in the future, however I know that there are a lot of firms who are already working on solutions that are not that far off.

The need for oversight of advice fees goes back to the sole purpose test and has been followed through by APRA and ASIC since the Royal Commission. We need to accept that the sole purpose test has an important role to play, however it has got out of control in many respects. We do not support trustees reviewing SoAs and believe that there should be a better way of ensuring that the advice fees are appropriate and align with the sole purpose test. We have also argued strongly that it should not apply to clients in retirement phase who have already met a condition of release and can chose to withdraw their money whenever they chose to do so. Why should trustees have any role in this case?

It is difficult to avoid the fact that trustees do have an obligation in this space, however there needs to be a better, more efficient and less intrusive way.

Thanks ShwetaM1. The CSLR is designed to ensure that clients who have been awarded a determination by AFCA, are actually paid, even when the firm becomes insolvent or refuses to pay. This is an objective that we can support, provided it is applied in a reasonable manner.

We are not aware of a similar scheme, however neither are other professions subject to an ombudsman arrangement with the powers that AFCA has. There are other forms of protection for clients in other fields including stockbroking, however what we have is quite unusual and very protective of clients. Some would argue that this is understandable given the critically important role that advisers play in the management of their client’s financial affairs.

We are certainly concerned that financial advice often takes the blame for what is basically a product issue, and we would argue that was at the core of what went wrong with Dixon Advisory. We also argue that the exclusion of MISs from the CSLR scheme, places an unfair priority on seeking fault in the advice that was provided. We can only continue to argue against the way this works and seek more comprehensive action by the regulators against product providers when things go wrong.

The FAAA is holding a webinar on Tuesday 6 August to hear from AFCA and the CSLR about how the CSLR will work. Please attend this if you would like to know more about the CSLR.

Thanks OTF Curious Observer. The coalition are aware of our objections and are sympathetic to our concerns. I believe that they are supportive of our views on the retrospective application of the legislation and the Government being forced to meet it’s earlier commitment to pay for the first 12 months of the scheme. I expect that we will hear more from them on the CSLR over time.

The PI Insurer for the Dixon Advisory and broader E&P Financial Group has made a contribution towards the claims, which we understand is $12m. This is a tiny fraction of what the total cost will end out being. The problem with PI is that there is normally a cap and that it does not apply in a range of circumstances, including non approved products and after a business goes into administration. It will never provide the level of protection that we might want in the case of a black swan event like Dixon Advisory.

We would love to know the full reason why action was not taken against the Directors for what went on in the Dixon Advisory business. The answers that ASIC have provided so far in response to that question do not give us an explanation that we can accept.

The Dixon Advisory case sets an example of why there are important flaws in the design of the CSLR. It should not enable people to just walk away from an advice subsidiary and keep operating in another form. This is wrong. There needs to be consequences for this type of activity and the scheme needs to be fixed to ensure that this cannot be repeated.

The FAAA is holding a webinar on Tuesday 6 August to hear from AFCA and the CSLR about how the CSLR will work. Please attend this if you would like to know more about the CSLR.

Thanks Alex. Let's deal with these two matters separately. With the ASIC Funding Levy, the number of advisers is critical. An increase in advisers numbers will have an automatic impact of reducing the levy per adviser. On the other hand, what has really driven the cost has been what ASIC spends on Enforcement. In the recently released set of numbers this is $19m, versus $6.5m for supervision and surveillance. On top of this, there is a significant allocation of overheads. In total Enforcement will be costing us at least $30m out of $48m. We only get one number and no additional detail. We know that we are paying a lot of money for unlicensed operators, which we strongly disagree with. In the past we have paid for matters where the connection to financial advice was weak. The lack of transparency on this is a problem. Also, when it comes to the fines and penalties generated by the enforcement cases that we fund, we would like the money to come back into the pool to offset the Levy

In terms of the CSLR, it is very early days, however the biggest issue at present is Dixon Advisory. That is a retrospective cost that we should not be paying for. Once the Dixon Advisory debacle is behind us, it will be up to the CSLR to get the operating costs down. Otherwise we need to do everything that we can to avoid future black swan events. This means reporting concerns about licensees to ASIC and ASIC taking appropriate and timely action to minimise the risk of consumer harm.

Thanks Alex. I think it is important to put on record the fact that Misha apologised for that comment. It was not appropriate and it did not reflect how the very vast majority of advisers operate.  The DBFO Tranche 1 debate got a bit challenging, however I think we landed in the right space and I trust all sides will accept that.

Yes there is a risk that we could go back to the bad old days of the FoFA and FoFA Amendment days. I hope that is not the case. The world is very different now and there is little doubt that the divides that existed in the past are simply much less relevant now. Our members work happily with all types of funds and we engage well with all types of funds as well. More work can be done by some funds to make them easier for financial advisers to work with, and we certainly hope that is a focus for them going forward. I think in this regard the future is much brighter than it has been and we should embrace the prospect of a world where advisers can happily work with whatever fund best suits the needs of their clients.

Welcome everyone to today's AMA!

Please ensure you read the instructions above before you post.

In order to see new questions and responses, make sure you refresh the page regularly.

Let me know if you need any assistance!