1

catch-up on ongoing international developments• Australia (FOFA)

• UK (RDR)

other international discussions• who is a “financial planner”?

• CFP Board disclosure recommendations

• IOSCO suitability consultation

Agenda

2

… and there’s nothing wrong with that! of course, we would never do everything just because others do it …

Our Regulators tend to follow …

3

what is it all about?• ban conflicted remuneration structures (including commissions and volume based payments)

• statutory fiduciary duty: act in best interests of clients

• introduce “adviser charging” (clear and product neutral; opt-in)

• percentage-based fees only on ungeared products

• expand availability of low-cost “simple advice”

• stronger powers for regulator

when?• 1 July 2012

• 1 July 2013: ban on risk commission (within super)

Australia

4

RDR aims to ensure that:• consumers are offered

– transparent and

– fair

… charging system for the advice they receive

• consumers are clear about

… the service they receive; and

• consumers receive advice

… from highly respected professionals

UK

5

To achieve this, new FSA rules will require:• advisory firms to:

– explicitly disclose and separately charge clients for their services;

– describe their services as either independent or restricted; and

• individual advisers to:– adhere to consistent professional standards, including a code of ethics.

when?• 31 December 2012

UK

6

intermediary remuneration review• consultation with industry bodies

• questions around:– intermediary services and advice

– independence (relevant?)

– fee-based advice (commission banning? prescribed fee basis? annual renewal?)

– risk business remuneration?

– how low-income market differs

The Link to us back home…

7

who is a “financial planner”?• most progress in Australia

– currently: law requires effectively 3 months’ worth of study

– ASIC proposal: “knowledge update review” every 3 years

– FPA from 1 July 2013: new members to have undergrad degree

– recognition of term “financial planner”: government to legislate mid 2013 (require prof body membership? cf. US coalition opposition)

Other international discussions

8

CFP® Board proposals to SEC:• simpler disclosure in 4 focused areas:

– conflicts of interest

– fees and costs

– planner’s background

– scope of representation

• must make the above prior to engagement

• plain English, in writing and available electronically

Other international discussions

9

International Organisation of Securities Commissions• suitability requirements for complex financial products

– advisors to classify clients: retail or non-retail– general advisor duties:

* act honestly, fairly and professionally* manage conflicts of interest

– sufficient disclosure to enable client decisions– client protection to exist even if sales-only transaction– advisor to ensure recommendations are based on assessment that product matches client’s experience, knowledge, investment objectives, risk appetite and capacity for loss– advisor must have sufficient info before making a recommendation– must have staff polices that remove incentives to recommend unduly complex product

IOSCO Consultation