Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
FPA calls for ‘true’ professional regulation of financial advisers
As part of the government’s commitment to ensure Australian’s can access quality financial advice, a new disciplinary system for financial planners has been proposed that includes a raft of changes including many previous roles falling under Treasury and ASIC coverage.
The Financial Planning Association of Australia (FPA) has thrown its support for the Government’s proposal to establish a new disciplinary function for financial planners but has called for even “further refinement to improve the model, including the creation of a true professional registration for financial planners.”
The FPA says the proposed model includes important reforms that are at the core of the FPA’s policy platform – Affordable Advice, Sustainable Profession – including removing duplicate professional standards applied by the Tax Practitioners Board (TPB) and creating a disciplinary function with the powers and expertise to directly respond to misconduct.
FPA CEO Dante De Gori said, “The FPA has long advocated for the need for reform to reduce duplication and rising costs facing financial planners. We welcome the recognition of this in the draft legislation with the proposal to wind up FASEA and removing the redundant oversight of the TPB being important steps in achieving this goal. However, it is crucial we get this right and ensure the success of the proposed model. Our key recommendation for this draft model is to create a true professional registration which is a personal requirement for all financial planners.”
Positive highlights of this registration
- The proposed model makes the registration of a financial planner the responsibility of their AFSL.
- The registration is dependent on the planner’s ongoing engagement by the AFSL and effectively duplicates the existing authorisation process.
The FPA argues that a more appropriate registration process should show that an individual has met their professional requirements, is in good standing in the community and is ready to serve their clients. The FPA said “a financial planner’s registration should then follow them throughout their career and be a valued symbol of their professional status and commitment to uphold professional values. The creation of a personal obligation to register is an essential component of any professional framework.”
“It’s the missing piece to the puzzle. Similar to the legal, medical or architectural professions, the FPA strongly supports a model in which registration is the personal responsibility of each financial planner and is not connected with their employment or authorisation under an AFSL.”
In conclusion, the FPA has “recommended some improvements to the proposed reform relating to the TPB. While the proposed reform is positive and addresses obvious duplication, the current drafting does not meet the Government’s intention of creating a single set of professional standards for financial planners and a single regulatory regime. The FPA recommends that the draft Bill remove the requirements for AFSLs and Corporate Authorised Representative (CARs) to register with the TPB.”
“Establishing a professional registration for financial planners is a perfect opportunity to build the Financial Adviser Register into the valuable resource that it could be,” concludes Mr De Gori.
