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Personal advice regulation problems set for ASIC review

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The Australian Securities and Investments Commission (ASIC) is reviewing rules that have acted as a disincentive for brokers and advisers to provide personal advice across a limited range of areas.

ASIC says concerns about regulatory requirements for limited advice – also called scaled advice – have meant it is often not offered to consumers despite demand for affordable assistance on specific issues.

National Insurance Brokers Association (NIBA) CEO Dallas Booth says the consultation paper goes to the heart of what personal advice should look like amid concerns about the issue.

“Many insurance brokers have said in the past that they are reluctant to operate under a personal advice model for retail clients, because of the cost and complexity of regulatory obligations in this area,” he said.

“NIBA will give very careful consideration to this consultation and will respond to ASIC in due course.”

The group is encouraging comments and suggestions from members on the topic.

ASIC says the term “scaled advice” has contributed to misunderstanding about the difference between comprehensive advice, which covers all areas relevant to a client, and limited advice that is targeted to a specific issue.

The regulator has previously published a “considerable amount of guidance” on how to provide limited advice that meets legal obligations, but it is clear issues have not been resolved.

A consultation paper released last week, titled Promoting Access to Affordable Advice for Consumers, is part of broader work in the area.

“Good quality affordable personal advice may help consumers make better financial decisions, especially during times of heightened vulnerability,” ASIC Commissioner Danielle Press said.

“We welcome feedback from the financial advice industry and others with an interest in making advice more accessible to consumers.”

Submissions are due by January 18 and ASIC will hold industry roundtables in the first quarter to discuss issues raised.

ASIC says it will work with the industry on steps that can be taken and will pass feedback on to the Government on any law reforms that may be required.

More details are available here.