The government’s enhanced adviser register will not have a profound effect on financial planners or consumers, according to Richard Batten, partner, Minter Ellison.
He spoke with Professional Planner just days after the Government’s last red tape “Repeal Day” of 2014, which ended on 29 October.
“This would seem to have all the hallmarks, no doubt with good intention, of something that’s going to create significant amounts of red tape. Of course, that’s not a reason not to do something…there has been a demand for it, there is no doubt,” Batten says.
The government announced details about the adviser register in mid-October. It is due to launch by March next year.
The industry response was largely positive, with a few pockets of detractors among the government opposition, Industry Super Australia and independent adviser associations.
“This whole debate, it’s a bit of a shadow debate. The reality is that financial planners are in everyone’s sights, they’re an easy target, so people are just throwing things out there and seeing what they can get,” Batten says.
He questions what new checks and balances the adviser register really adds to the regulatory environment.
“You’ve always been able to identify who they are, who the licensee responsible is, not only through the disclosure they’re required to give, but the ASIC register that’s existed ever since Financial Service Reform came into effect in 2002-2003.
“The idea of having a register is not new. I suppose to the extent this extends to employed advisers, then that is new. There is some benefit in having all the names in one place and easily identifiable.
Will consumers use it?
He refers to concerns some have raised that the register will not be user-friendly enough for consumers and will not compare advisers’ by their level of experience or remuneration models.
“The current register allows searching by name…the search functionality of the new register will be pretty significant in terms of its usefulness to somebody,” Batten says.
He notes the register will not include information about the physical location of financial planners. “I don’t see it as a device a consumer would use to find an adviser, it’s intended to be a device for a consumer to check up on an adviser.”
“But at a broad level, it probably is as much as you could expect a government to do in this area.”
Batten believes some of the criticisms leveled at the register are unfounded. The Independent Financial Advisers’ Association of Australia (IFAAA) noted the absence of Financial Services Guides and detail on whether an adviser is legally classified as independent.
“I don’t think it’s very well thought through, that observation. It feels like ‘let’s have information for the sake of it’, but I query what that would be and how consumers would use it.
“We do already have so much disclosure about remuneration. The ban on conflicted remuneration means if you are engaging an adviser from scratch, they will not be entitled to be getting any commission. They will have to agree with you on the way they’ll be remunerated.”
Fee disclosure
He believes the real issue is what level of detail any register can have about fees, given the wide variations and the reluctance of advisers to display them publicly.
“No one’s going to want to state their prices in that particular way,” Batten says.
“Are we imagining [the government register] as a market place? That should not be the role of government.”
Private sector efforts
Batten also refers to some of the other attempts at creating adviser registers that have emerged.
BT Financial Group launched Adviser View on 13 October. This holds information about financial advisers from BT and its affiliated AFS licensees, which can be folded into the government register.
Adviser Rating, announced the following day, has been compared to travel review website Trip Adviser in that consumers publicly rank financial planners according to qualifications, compliance and experience.
“One would think that kind of measure is likely to resonate significantly for consumers and will presumably be a device consumers could use to find advisers.
“It’s interesting, but I do think that private facility has a potential to have much more profound implications,” Batten says.
However, the potential for defamation of financial advisers, along with possible breaches of privacy laws, are among some issues he sees with private registers such as Adviser Rating.
“If you had advisers being put onto some private register, that could be a conflict. Consumers potentially won’t be able to add the adviser name themselves, but may be able to submit an adviser name to be involved, subject to approval.”
