Individual adviser registration – does it still matter?
ANALYSIS
Few financial advisers will be particularly bothered that the Australian Securities and Investments Commission (ASIC) has extended the date by which financial advisers must be individually registered as relevant providers – it is the third such extension since late 2021.
The reason for the extension is pretty simple – the enabling legislation has not yet passed the Parliament and there may yet be amendments to the Government’s approach which might impact the adviser registration process.
But it is worth remembering that the whole exercise grew out of the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services industry and that the adviser registration regime is regarded by many, including the Financial Advice Association of Australia (FAAA) as important to ensuring financial planning has the underpinnings of a genuine profession.
It is also worth remembering that the number of financial advisers currently on the Financial Adviser Register is around 40% fewer than when the original legislation was drafted while the number of large licensees is down to just two – Insignia Financial and AMP Limited.
The problem, however, is that while advisers will need to be registered annually as “relevant providers”, they will still need to obtain an Australian Financial Services License (AFSL) or work as authorised representative under someone’s else’s license.
Indeed, the original explanatory materials attaching to the 2021 legislation described the situation thus: “In addition to authorising a person to provide financial advice, the financial services licensee is required to register (and annually renew) the financial adviser”.
It said this compared with the pre-existing situation under which “A financial services licensee is required to authorise a person to provide financial on their behalf”.
Around the same time, the former chief executive of the Financial Planning Association (FPA), Dante De Gori said his organisation welcomed and supported a system of “individual personal registration”.
“The current model, which will come into effect from 1 January 2022, makes the registration of a financial planner the responsibility of their AFSL in year one until the financial adviser register is transferred from ASIC to the ATO in 2023,” De Gori said at the time. “While the AFSL registering the financial planner in year one is effectively a duplication of the existing authorisation process, this is just a short-term solution on the professionalism journey of financial planning and a strong step in the right direction.”
Of course, the FAR has not been transferred to the ATO and remains under the auspices of ASIC and, in the intervening three years, the number of self-licensed advisers and so-called micro-licensees has risen significantly.
At the same time, the Government has yet to translate the key recommendations of the Quality of Advice Review (QAR) into legislation and it is as yet unclear how the delivery of advice via superannuation funds will im
Can someone please remind me why dealer groups still exist. I thought we were a profession now?
The sync in me would say, so ASIC can plunder their deep pockets (EG remediation, look back etc.,) as to the future. Who knows.