Risk Regulatory Update

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AFSA publishes insurance in super report

The Association of Superannuation Funds of Australia (ASFA) and Deloitte have published a report on insurance in superannuation in Australia, The Future of Insurance in Superannuation. The report looks at the benefits and opportunities in our current system.

Key findings of the report include:

  • Better designed policy and data access for increased member benefits like disability and death cover

  • More focus on returning to work and wellness for 83,000 members for multiple benefits

  • Earlier and greater access to treatment to reduce social welfare and unemployment costs

QAR submission to treasury urging change to term ‘general advice’

Nigel Baker, founder of digital advice solution Scientiam, has submitted a QAR to Treasury advocating for the term 'general advice' to be changed to 'general information'. He argues that this would strengthen consumer protections, minimise confusion and encourage more exploration and investment in digital advice and information solutions. Scientiam’s submission also questions if employees of product issuers should be known as financial advisers and represent their services as financial product advice.

CIFAA association launches for financial advisers

Some independent advisers have joined forces to create their very own association, the Certified Independent Financial Advisers Association (CIFAA). Two Perth advisers, Christopher Young and Berivan Dubier, and Victorian Nick Bruining set up the volunteer-run association. Associate membership is restricted to retired CIFAA members and students, or providers in their provisional professional year.

ASIC’s new AFS licence reporting changes

According to the Australian Securities and Investments Commission (ASIC) new reporting requirements, Australian Financial Services (AFS) licensees must contain disclosure consistent with other non-profit organisations with standards set by the Australian Accounting Standards Board (AASB). From July 2021 there will be no more special purpose financial reports (SPFRs) without all disclosures required by the accounting standards.

ASIC says advice sector regulation cost to drop

ASIC has published its draft Cost Recovery Implementation Statement (CRIS), with costs expected to decrease from 2020-21 to 2021-22. The draft CRIS says the cost of regulating licensees that offer personal advice to retail clients on relevant products will drop from $25.8 million to $24 million. This cost is for regulating nearly 3,000 AFS licensees and over 17,000 financial advisers. A minimum levy of $1,500 is expected per licensee, with an additional $1,142 per adviser.

Licensees offering advice on products that are not relevant financial products will be cut almost in half, going from $189,000 to $66,500. For licensees providing general advice, costs will be down by $100,000.

Insurance product providers should expect an increase in costs, going from $24.6 million to $29 .4 million, with around $4 million for enforcement and $3 million for supervision and surveillance. Insurance product distributor costs will stay the same, at about $3 million, meanwhile claims handling and settling service providers are now to be charged as a separate category with levy costs of $804,00. Risk management product provider costs are to rise a significant amount, from $119,000 to $598,000.

Feedback on the draft CRIS can be submitted until 28 June 2022.

AFSA wants RoA to replace SoA on some topics

The Australian Financial Security Authority (AFSA) is urging the government to let financial advisers address specific topics via a Record of Advice (RoA) instead of the much more costly Statement of Advice (SoA). AFSA made a submission to the Quality of Advice review to support adopting a less complex document offering advice.