ASIC moves on COVID-19 financial advice access

ASIC has heeded industry calls for leadership and implemented three temporary measures to increase access to financial advice in response to unprecedented demand placed on the financial advice industry by the impact of the COVID-19 pandemic.

The temporary changes are welcome as consumers, investors, workers and financial advisors struggle to deal with the fall-out of COVID-19. Increased regulatory and AFS licensee pressures and requirements have left the advice industry ill-equipped to deal with the urgent needs of clients and consumers. The changes go some way to address this.

Advisers are better equipped to respond to their advisors needs, provided their Licensees allow them to. The onus is now on large licensees to reset increasingly rigid and protracted internal requirements and on ASIC to ask whether its advice requirements are out of balance and need longer term recalibration.

The temporary changes are:

Statements of advice: the timeframe for providing SOAs is extended from five to 30 days after time-critical advice is provided.

Records of advice: ROAs may now be provided in certain COVID-19 related advice circumstances where an SOA would formerly have been required because:

• The client’s personal circumstances have changed because of the COVID-19 pandemic; and
• The client sees an adviser from the same AFS licensee or practice, not their original advisor;

Increased access to advice re the Early Access to Super Scheme:

• Advice providers are not required to give a statement of advice when advising on the early access to super scheme;
• Certain registered tax agents may give advice to existing clients about the early access scheme without holding or being authorised under an AFSL;
• Super trustees may expand the scope of personal advice that may be provided under intra-fund advice

The three temporary measures respond to the unprecedented pressure placed on the financial advice industry by the collapse financial markets as a result of the COVID-19 pandemic, discussed by Mackay Lawyers & Advisors Associate Director Michael Chapman’s here https://www.mackayla.com.au/news

The measures will remain in place until ASIC lifts them, which will not occur without 30 days’ notice, or in the case of the relief to Super trustees, when the early release scheme is ended. In the case of the Early Access to Super Scheme, the temporary measures are subject to strict conditions:

• Clients must receive a ROA;
• The advice fee must be no greater than $300;
• The adviser must establish the client is entitled to the early access to super; and
• The client must have approached the adviser for advice (not vice versa).

ASIC has confirmed it will conduct surveillance to ensure advisers relying upon the relief are acting in the interests of their clients.

The measures are welcome, if somewhat belated, as investors, workers and markets struggle to deal with the volatility and outfall of the COVID-19 pandemic.

The advice industry has been beset by increased regulatory pressure, and increasingly rigid and protracted processes from licensees, in response to the failings exposed by the Hayne Royal Commission. This left it ill-equipped to respond in real time to the demands of the pandemic.

Individual advisers are now better placed to provide advice to consumers when needed.

The onus is now on licensees to adapt their processes to the temporary changes, so consumers can finally get the advice they need.

ASIC’s media release is available here: https://asic.gov.au/about-asic/news-centre/find-a-media-release/2020-releases/20-085mr-asic-grants-relief-to-industry-to-provide-affordable-and-timely-financial-advice-during-the-covid-19-pandemic/

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