In a statement, FPA chief executive Dante De Gori said the association was calling for the AFSL system to be reformed to focus on the licensing of financial products rather than the provision of financial advice.
“While the AFSL system plays an important role in regulating financial products and services, recent reforms have focused the regulation of financial advice at the individual practitioner level,” Mr De Gori said.
“This is an appropriate approach and acknowledges the relationship between a client and their financial planner is a personal relationship, not one between an AFSL and the client. Future reforms to the regulation of financial advice should occur through the professional standards framework and rely on individual registration of financial planners.”
Mr De Gori said the AFSL system currently added unnecessary costs to the provision of advice and introduced potential conflicts between the views of the licensee and adviser.
The association said the establishment of a single disciplinary body for advisers would open the door to individual registration, and that it made sense for the body to also have responsibility over monitoring an adviser’s qualifications and exam status.
“This information should be provided by the individual financial planner and verified as correct by the single disciplinary body,” Mr De Gori said.
“In this manner, the register will become an authoritative source of information on each financial planner, including their qualifications, compliance with professional standards and disciplinary record.”
My research confirm, there is merit in following the route of professionally qualified accountants, lawyers and doctors. Finally, the FPA is onboard. A new ‘licensing’/self-regulatory regime has the potential to reduce the cost of advice by reducing corporate compliance requirements and all this legislation that is unnecessary when the ‘right’ people (ethical and client best interest oriented culture practitioners and kept in line by other ethical and client best interest oriented practitioners ) are given the privilege to provide strategic financial advice to achieve client goals. Product is but a means to achieve the financial strategy and goals. Not all financial strategies to achieve goals needs a financial product.
If Accountants, Lawyers and Doctors don’t need a licensee then why should financial planners,
All of those businesses require PI and they are to the same high standard in regards to the advice or services they provide. Licensees have failed the client and planners time and time again only approving their own products on the APL requiring onerous SOA that are too lengthy so the clients don’t even understand it and ASIC does not require that they have even provided sample SOAs that they themselves state should be shorter and simpler so clients can understand but the licensee requires this lengthy SOAs just to cover themselves not what is I the clients best interest.
Licensees don’t provide anything we can’t get ourselves the AFA head claims they provide training and education well we can get that ourselves from any CPD provider guess what accountants lawyers and doctors need to do CPD as well but they don’t have a licensee
The AFA head claims licensees provide support that is a complete joke they hassle me on my investment choices for clients wanting me to buy when the market is high and wanting me to sell when the market is low. If I wanted help with an SOA they would charge me a fee on top of the huge amounts of money they already take from my firm.
Abolish licensees this will get rid of the conflict of interest they pose, it will reduce cost which will ultimately benefit the client
For the record, Accountants, Lawyers and Doctors all need to be licensed in order to lawfully practice their profession. Accountants need a certificate that allows them to provide services to the public as an Accountant (which is subject to annual review and renewal), Tax Agents must be registered with the Tax Practitioners Board in order to provide Tax Agent/Advisory services to the public, Lawyers need to obtain a practising certificate in order to provide legal services to the public, and medical professionals need to be registered as a medical practitioner to provide medical services to the public. It is important that there be some regulation as to who can provide financial advice, but I agree with you that the current system (where most licenses are held by financial institutions, as opposed to the persons actually providing the financial advice) is not adequate for our point in evolution. Sure there needs to be control over the financial institutions and product providers, however, the qualification for registration as a financial services practitioner should be more aligned to that of the professions (i.e. doctors, lawyers, accountants) where an individual is assessed upon their education and experience and awarded a license to provide financial services upon those criteria. Ultimately, the aim is to protect the consumer of financial services – thus the knowledge, competence and ability of the person providing those services is paramount. Unfortunately, that would only allow financial services professional to make recommendations down to a level of class of product only – not specific financial products. Herein lies the true issue – whilst the financial services professional should be accountable for the advice they provide, most clients want to be told what financial product will meet their needs, and there is so much variability in the types of financial products available, it is impossible for an independant financial services professional to have an adequate knowledge of each and every product in the market in order to recommend the most suitable product that will optimally meet the client’s needs. The suitability of financial product recommendations should be the responsibility of the product provider and the financial product regulator should require the product provider to document the suitability assessment with the provision of the product. Anyone have any ideas how to fix this issue?
Accountants only need a licence (public practice certificate) if they are a member of a professional body. It’s not unlawful to run an accounting practice without any qualifications, licences or professional memberships.
A qualified accountant is defined in s88B of the Corporations Act as a person meeting the criteria in a class declaration made by ASIC. Under ASIC’s class order [CO 01/1256], you are a qualified accountant if you: belong to one of the following professional bodies at the declared membership classification, and you comply with your body’s continuing professional education requirements.
This is irrelevant – my point is that a person can be an accountant without a licence or qualification, unlike a doctor or lawyer
Not much an accountant can do without being a Registered Tax Agent, in which case they MUST be a member of a ‘recognised professional organisation’.
Licensees are struggling to get insurance now and yet under this proposal we would all need to get individual insurance covers, and you think licensees hold you to ransom. Another non thought out FPA brain explosion.
Relatively easy to address. Use the same system that is in place for lawyers and accountants and limit the liability under the existing Professional Standards Legislation. As I said in a previous post: the whole structure can be simply copied from existing schemes. It is exceedingly simple – which is perhaps why it was never considered!
How about running a poll ‘SMSF Adviser’ to see how many of your readers are in support of abolishing the AFSL system in favour of regulating financial advisers similar to the way Tax Practitioners are regulated?
Thanks Query for your query. Will definitely follow up on this suggestion. New poll should be up very soon.
I made a submission to the senate inquiry into financial services many years ago advocating precisely this concept. My proposal was to set up a body and system similar to the Tax Agents Board (as it was then called). Easy to implement, as all you need to do is copy an existing structure. Of course the mighty banks and AMPs of this world wouldn’t have a bar of it.
Abso-bloody-lutely! All of the burden of compliance has fallen us individual advisers with AFSL’s becoming leeches who supervene themselves between us, our revenue and interfering in our delivery of a good advice experience. There is way more to advice than product advice. Way more to service than SOA’s. Much more to supervision than checklist compliance. This system so broken. License Me Now.
I have been calling for this for over 20 years! Why has it taken the FPA so long to get its arse into gear????? This was a contrived debacle right from the get-go and the FPA knew it yet stood back and oversaw the exit of hundreds on well respected, highly qualified advisers. Back then Licensees held the upper hand, my only hope now is this hand gets chopped off. Individual licensing has always been the way to go. A direct license via ASIC means AFSL Licensees are no longer required so we can clean out the parasites from this profession. Feel free to look me up on the ASIC website, you will see the three that I was forced to be licensed to, none of which were banks