“Fearing an ASIC investigation for minor breaches has induced advisers to implement all compliance requirements to avoid possible prosecution,” the association said. 

“This has led to massive SOAs and the cost of advice escalating to over $5,000 to onboard a new client.”

The association said it was important for both regulatory bodies to engage with the advice sector in a more constructive way to reduce negative perceptions.

“We believe the most effective way to eliminate this confused, frightened, costly and manipulated environment is ASIC and AFCA regularly engaging directly with advisers on compliance matters in a panel format to ensure all are on the same page,” the submission said. 

“This particularly applies to the composition of an SOA where the current culture is creating a circa 100-page mega document that most clients cannot be bothered reading or understanding but are paying for. 

“The conundrum for advisers during an AFCA defence is clients stating ‘they did not understand the advice’ due to the size and complexity of the SOA, which is largely accepted by the judiciary, but advisers feel they have no choice but to produce such a document to legally protect themselves. 

“This is an expensive, vicious circle that needs addressing directly with ASIC and AFCA senior executives.”

By regularly engaging with advisers themselves when it came to ASIC interpretations of regulation and their practical impacts on advice businesses, the AIOFP said, the regulator would “give confidence to advisers to act in a manner that is appropriate” when it came to providing affordable advice.