The government’s announcement of details on the enhanced public register of financial advisers has drawn a resoundingly positive response from across the industry.
It comes after the Senate Inquiry into the Australian Securities and Investment Commission (ASIC) and financial advice scandals at Commonwealth Financial Planning and Macquarie Private Wealth.
“Our sense is that it has wide industry support and is important in terms of, at the very least, knowing how many financial planners are operating in this country, who they’re licensed to, and what their professional qualifications and memberships are – there’s no downside in this for anybody,” says Mark Rantall, chief executive, Financial Planning Association (FPA).
With the register due to be rolled out in the first quarter of 2015, it will include the following individual financial adviser details:
– name, registration number, status, and experience
– qualifications and professional association memberships
– Australian Financial Services licensee, previous licensees/authorised representatives and business name
– product areas the adviser can provide advice on
– any bans, disqualifications or enforceable undertakings
– details around ownership of the financial services licensee and disclosure of the ultimate parent company where applicable.
It responds to widespread calls for the industry to restore public confidence in financial planning and to progress towards professionalism. This follows negative assessments from both the Senate Inquiry and ASIC, which earlier this month issued its report into instances of bad financial advice in the area of life insurance.
“Improving transparency will help drive improvements in consumer confidence in the financial advice industry…It is critical that Australians have unhindered access to information on their financial adviser and the company employing the adviser,” according to a statement issued by Senator Mathias Cormann, Minister for Finance.
“This was also something we’ve been calling for for some time, and we’re very pleased to see it come to fruition,” Rantall adds.
While Rantall concedes there is still some way to go, he says it is a “good start,” adding “there is a difference between getting a source of truth and a database that you can rely on [but] it is a good start.”
“The vast majority of financial planners are doing their jobs and operating correctly. Nobody that’s doing the right thing has got anything to fear from this.”
Broader government announcement
“I think the whole industry and the government has had an appropriate response to the senate inquiry. With the Financial System Inquiry and the Parliamentary Joint Committee into education and standards, we don’t need a royal commission on top of that. The register is an appropriate response,” Rantall says.
“With all of that going on, I think what we need to do is…we’ve got some of the most stringent regulations in the world, it would be good to see the Future of Financial Advice (FoFA) changes pass, we bed them down and that we hopefully can get increased education standards through the PJC inquiry and we can start to move forward.”
He refers to the FPA having given testimony at the PJC a in recent weeks. “One would hope towards the end of the year, if not earlier next year, we’ll see the results of that inquiry and the government response from there.
“We’re looking for degree qualifications from new entrants and any lift in competency if required from existing financial planners, approved codes of conduct and professional associations.
“The industry is on a journey, it is seeking to get ahead of regulation in that regard, and this is a positive thing.”
“I think that’s why there’s broad industry support, but that needs to be run by the regulator, but you have to have confidence in the data and that there is one source of truth for that.”
Other industry stakeholders have also added their support for the new enhanced adviser register.
Financial Services Council
John Brogden, the Financial Services Council’s (FSC) chief executive, says it strongly supports the enhanced adviser register.
“Consumers will also be able to use the register to find out if an adviser has been subjected to bans, disqualifications or enforceable undertakings.
“Greater transparency and disclosure will help to build trust and confidence in the financial advice industry,” he says
Association of Financial Advisers
The AFA says it views the government’s announcement as “another step forward in enhancing consumer confidence in financial advice.”
“The register is a great outcome for consumers. It is a necessary tool that can be easily accessed and relied upon as a source of information on the qualifications and experience of their financial adviser,” says AFA National President Deborah Kent.
Australian Banking Association
Diane Tate, acting chief executive officer of the ABA, says the register is an important initiative in ensuring consumers can find and choose a financial adviser that suits their needs.
“We have advocated to the Federal Government and consumer representatives for this register and believe it will provide consumers with the information they need to be confident in the financial advice they seek and receive.
“The financial adviser register will improve transparency and strengthen the quality of data available to consumers about financial advisers, including their status in the industry, their qualifications and experience, what they are authorised to provide advice on, who they work for and the ultimate owner of their advice business.
