ISA claims advice sector lobbied to water down rules

Industry Super Australia (ISA) has claimed that elements of the retail financial advice sector have lobbied for a watering down of the distributor obligations within the Government’s proposed legislation which would hand the Australian Securities and Investments Commission (ASIC) product intervention powers.

An ISA submission responding to the legislation’s exposure draft and made available to the Senate Economics Legislation Committee, urged against any dilution to distributor obligations, claiming that some product manufacturers had sought to hide behind the general advice provisions.

The ISA said it was not convinced an amendment to the personal advice definition was required to establish that information required for a market determination does not constitute personal advice.

“The dilution of this provision seems to have been driven by significant lobbying by a retail financial advice sector which has featured prominently in the Royal Commission,” the ISA submission said.

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“It is not clear to us why the design and distribution obligations cannot sit alongside an adviser’s obligations to act in clients’ best interests,” it said. “One is in relation to a class of investors, the other is in relation to an individual’s personal financial circumstances.”

It said that the scope was different, and personal advice was a critical distribution channel.

“Consumers would expect advisers to be subject to the same obligations as the issuer – particularly where the adviser is giving personal advice from within a vertically integrated financial institution,” the ISA submission said.

The Senate Economics Legislation Committee is currently receiving further submissions on the Government’s Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Bill 2018.