FSC presents ‘personalized advisory framework’ for the future of advisory

The Financial Services Council (FSC) has developed a “proposed personal advice framework” which it hopes will build on existing changes while providing a simpler framework for advisers and consumers.

In the organization’s submission to the Board Quality Review, she highlighted several areas that could be improved or changed.

He said: “The FSC refers to this framework as its ‘proposed personal advice framework’ recognizing that all advice is personal but may be increased or decreased in terms of disclosure and obligations aligned with the adviser’s professional judgment. and the consumer. ultimately clarified need in the framework with the consumer. All advice would be referred to and recognized as “personal advice” aligned with the consumer perspective (e.g. in-fund advice, limited advice, digital advice would all be considered personal advice).

“Adopting the FSC’s Custom Advisory Framework will ensure the benefits of the changes of recent years while providing a simpler overall framework.”

He also suggested that the Australian Securities and Investments Commission (ASIC) set up an advisory unit to introduce a principles-based regulatory approach before 2026, which included developing industry standard documents, l automation of the consulting process to reduce consulting costs. and holistic support for the profession.

FSC’s tailored advisory framework included:

  • Removing safe harbor steps to comply with the best interest obligation and amending the code of ethics to reflect this change;
  • The introduction of a technology-neutral advice letter with simplified requirements supported by evolving advice obligations;
  • Redefining advice with a framework of general information on personal advice in a financial product-independent manner on which the industry is consulted before implementation.
  • The retention of the Australian Financial Services License and the introduction of a certificate of practice for financial advisers administered by a central body;
  • Intra-fund advice to be included in the proposed personalized advice framework.
  • No derogation from the framework of personalized advice for the accountancy profession.
  • Removal of personalized advice from Design and Distribution Obligations (DDO).
  • A system of principles-based requirements and industry-led compliance to characterize annual renewal and interactions between trustees, advisors and platforms in meeting fee consent obligations to consumers;
  • Redevelopment of regulatory guidance that is more exemplary and provides the regulator with greater ability to engage industry on compliance, such as an expansion of the fintech regulatory sandbox; and
  • Redefine the thresholds for wholesale investors and establish a method by which a financial advisor can determine a consumer’s suitability for being distinguished as a wholesale consumer.