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Working group signals changes

Code working group chairman Angus Dale-Jones says the group is already anticipating changes to the proposals it put forward – including the wording of its “good advice outcomes” directive.

Friday, May 11th 2018, 6:00AM 2 Comments

by Susan Edmunds

In its proposals, to form the basis of the new code of conduct for financial advisers, the group said achieving good advice outcomes should be one of the overarching principles of the new rules.

Advisers responded with criticism – saying that consumers would see “good outcomes” as products that performed well, rather than good advice given on them.

Dale-Jones said the group was aware that “outcome” was a word that could easily confuse people and it would probably try to find a different term to replace it as the development of the code continued.

There would also be likely changes around the competence requirements, he said.

“There are lots of different views of how we should draw the dividing line between more and less complex advice situations.”

Some submitters had indicated they thought the proposal for advice to be split into product advice and planning services was correct while others vehemently opposed it.

But Dale-Jones said it was too early to predict how the proposals might change – and how other suggestions might be amended – until the group had worked through all the submissions and feedback it received and heard.

Dale-Jones said he was aware that, to be fair to the industry, the code would soon have to get to more precise wording of its proposals from its previous high-level consultation approach.

It was waiting for feedback from the select committee considering the Financial Services Legislation Amendment Bill. That committee has been given more time to report – it now has until the end of July.

Dale-Jones said the Australian Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was important context to what the working group was doing because the code’s foundation was built on trust between advisers and consumers.

The commission was tackling issues that went to the heart of trust in financial services, he said.

But in terms of the working group’s approach, the priority was to hear back from select committee to see what direction the Financial Services Legislation Amendment Bill would take.

“At that stage once we’ve heard from them we can go on to look at the broader context and Australia is part of that context.”

An MBIE spokeswoman said the government still hoped to pass the bill this year.

"But regardless of when it gets through parliament, we will make sure there’s enough time for the advice industry to get ready before the regime comes into force.

Tags: Code Working Group conduct Financial Services Legislation Amendment Bill

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Comments from our readers

On 14 May 2018 at 9:17 am Dirty Harry said:
It is quite appropriate to suggest that the ARC into M in the B, S and FS industry is so very significant that the FSLAB SC and CWG should be given a lot more time.
Self-imposed deadlines be damned. Did that last time and ended up with the current mess.
The ARC is due to report in September. So your "context" has to wait until then.
"An MBIE spokeswoman said the government still hoped to pass the bill this year."
Why? What for?
An adviser spokesman said rushing and deadlines-for-no-good-reason is stupid. He hoped the government would get it right, even if it takes longer.
On 15 May 2018 at 3:57 pm Murray Weatherston said:
I must see the world through a different lens.
The Aussie Royal Commission really has nothing to do with reform of the Australian regulatory system
I see it as being much more about egregious breaches of the current regulatory system - the two case studies i watched live
1 Mrs McDowall who was encouraged to sell her house, embark on a B&B strategy that she could never afford the $800K loan, told she could borrow $1million from the bank, encouraged to take out life trauma TPD and income protection to cover that loan ($27000 p.a. premium) and after house sold with barely enough to cover existing mortgage car and other personal loans, told by bank they wouldn't lend her $200k or was it 400K, forving her to migrtae interstate etc - that was VPR advice in anyone's book
2 The senior government official encouraged to switch her work super to a SMSF - if she had taken advice, she would have lost a 1/2million additional benefit due under her work scheme in a couple of years - very PP advice too.
A lot of the rest was charging for services not provided; very poor vetting of advisors who were poor at previous firm shifting to new firm; banks taking ages to report breaches .
None of that has anything to do with reform of their advice service. Rather failure by firms to ensure good advice outcomes (to borrow a term from CWG and to use it as most people would interpret the term) under the existing law.
To delay because of Royal Commission over the ditch would be a very poor excuse and very poor policy decision.

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