Summary of Responses to Consultation Paper: Options for Change
[ Last Updated 2 December 2005 ]
Introduction
1. The purpose of this paper is to provide a general summary of the information and views contained in written responses to the Task Force's options for change paper. It does not summarise all the various points made in those submissions. Copies of the responses themselves (apart from those where confidentiality has been requested or sensitive information is involved) will be available on the Task Force's web pages shortly.
Overview
2. There were approximately 100 responses to the options paper. Responses were received from participants across all industry sectors, including advisers, industry organisations, industry commentators, product providers, consumer representatives, dispute resolution bodies, regulatory bodies and individuals.
3. Respondents generally supported the specific review outcomes put forward by the Task Force in its options paper. There was also a general level of agreement that some change was necessary to achieve the objectives identified while noting that any proposals for changes should be efficient and cost-effective.
Scope
4. There was substantial comment from respondents on the utility and workability of the scope of the reform proposals, particularly around the Task Force's three identified categories of intermediary functions - information only intermediaries, product marketers and financial advisers. Some respondents considered the categories were useful, others thought that more or fewer categories were required, while others considered that in practice distinguishing boundaries between the categories would be difficult.
5. There was also some comment made that particular products (e.g. general risk insurance, investment property sales) should be treated differently to other products, because of the limited and/or short-term nature of any risks associated with those products.
Reform Proposals
6. There was general agreement among most respondents that the Task Force's proposed consumer education proposal would be effective in addressing at least some of the issues raised. Many also agreed that enhanced disclosure was required, and that disclosure should be accurate, clear and concise.
7. Most respondents thought that enhanced redress is required, and many of these supported building on the existing Ombudsman schemes.
8. Most respondents also supported the Task Force's proposal for enhanced standards, particularly those relating to ethics and competency. Many also supported business conduct standards, but fewer supported standards for remuneration or restrictions on ownership structures.
Implementation Options
9. Of the implementation options identified in the paper (general legal standards, registration, restriction of designated occupations and licensing), there was considerable support among respondents for general legal standards. However, many respondents considered that this option should be combined with other options, particularly registration and licensing.
10. Respondents showed a mixed level of support for registration. Some considered that by itself, this option would do very little to achieve the objectives of the review. Others considered that registration would assist with recognition of and enforcement against intermediaries.
11. Of the four options, there was the least amount of support for restriction of designated occupations, particularly when restrictions were tied to methods of remuneration for intermediaries.
12. There was considerable support for licensing of intermediaries, though some also considered that this option would be too costly when balanced against the benefits of licensing.
13. A number of respondents proposed an option of co-regulation between industry and the government, which could include aspects of all four of the four Task Force's options. The key general features of this option are:
- A combination of industry self-regulatory organisation and government control of intermediaries;
- Minimum entry standards for industry participants;
- An effective mechanism for disputes resolution; and
- An effective mechanism for discipline and enforcement against intermediaries.
Trans-Tasman Factors
14. Most respondents considered that trans-Tasman issues were important to consider, and many of these thought it would be beneficial for industry if the TTMRA was able to be applied. However, many respondents also commented that it would be important to consider the cost of Australian regulation and its fit with New Zealand conditions.
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