FAAA canvasses adviser protections on abuse reporting

Mike Taylor

Managing Editor/Publisher, Financial Newswire

14 January 2026

The Financial Advice Association of Australia (FAAA) has strongly backed a tougher Government approach to financial abuse perpetrated through coerced directorships, stating that advisers are uniquely positioned to recognise such abuse.

But, at the same time, the FAAA has sought recognition of the need for financial advisers identifying financial abuse to have access to appropriate legal protections.

The FAAA has written to Treasury backing a submission filed by the Financial Abuse in Business Advisory Group supporting a tougher regime and extending it to encompass self-managed superannuation funds (SMSFs).

In a letter to the Treasury consultation, FAAA chief executive, Sarah Abood acknowledges that financial abuse through coerced directorships is often hidden and challenging to identify, making it a difficult issue to address.

“Many victims may not even realise that they have been appointed as a director, or they may not understand that this mechanism is being used as a means of financial abuse against them,” the letter said.

“Such abuse within familial relationships, where trust is implicitly granted, is particularly challenging to identify.”

“Due to their close relationships with clients, financial advisers can be uniquely positioned to recognise signs of financial abuse. This can include sudden changes in financial behaviour, unusual account activity, or a client’s confusion about their finances,” the FAAA said.

“We acknowledge that financial abuse through coerced directorships crosses multiple regulators and jurisdictions and has specific issues that need to be carefully considered. To ensure victims can be protected and helped, clear guidance on handling suspected abuse through directorship cases, including how to approach the client, who to report the abuse to, and what legal protections are available for both the client and the financial adviser, are necessary.”

Addressing the submission filed with Treasury, the FAAA said it particularly supported the following recommendations:

• Expanding reforms beyond company structures to include trusts, ABNs, partnerships and SMSFs – perpetrators exploit multiple business structures, not just companies.
• Strengthening safeguards in director registration and company processes
• Creating trauma-informed pathways for the removal of coerced directors and Director Identifications.
• Introducing standalone legal defences and extending timeframes for Director Penalty Notices.
• Ensuring perpetrator accountability through enforcement and the use of existing laws that allow prosecution for false statements to ASIC, shadow director liability, and phoenix activity.
• Funding Government agency specialist teams for the investigation and prosecution of perpetrators.
• Significant investment in specialist support services for victim-survivors.