Two-thirds want individual licensing: poll

Tahn Sharpe


July 10, 2018

Two-thirds of the advice industry thinks a system of individual licensing would be beneficial, an online poll conducted by Professional Planner has found.

The survey, which asked if the industry would be “better served with individual licensing for financial advisers”, generated a 67 per cent ‘yes’ vote.

The current licensing regime – whereby most advisers are authorised under the Australian Financial Services licence of a separate licensee, which also provides support and services – has been the subject of scrutiny since the recent Hayne royal commission. After revelations of conflicted advice, fees-for-no-service and an endemic lack of accountability in the industry, counsel assisting Rowena Orr called for submissions on whether it was “possible to implement a single system for professional discipline of financial advisers”, and ultimately if a “system of licensing both at an individual and an entity level” would be more appropriate.

The Association of Financial Advisers replied that “it is possible the option of individual licensing should be considered”, while the Financial Planning Association (FPA) reported that individual licensing would make it “more difficult for individuals to hide behind licensees and move around in the event of misconduct”.

Those responses hinted at what the poll results confirm – there is considerable advocacy for individual licensing and widespread interest in exploring its feasibility.

Professional Planner completed an in-depth study of the issue here; however, the poll results go further in painting a broader picture of how advisers themselves greet the prospect of individual licensing.

For better or worse?

Ray Miles, founder and director of Fortnum Wealth, says individual licensing “would be a better system, as the responsibility would go where it should go”.

Miles notes that licensees would need to “transform themselves into something a bit more useful”, which would probably mean shifting into more of a pure service and support role, but this would be a natural progression; individual licensing would mean more advisers in need of these services.

Not all advisers advocate a move to individual licensing, though. William Mills, an adviser at Price Financial Intelligence, says the compliance burden is too heavy for most advisers to take on.

“Individual advisers do not have the resources to handle the compliance requirements,” Mills says.

He explains that the risk of non-compliance is greater that advisers realise, and while he admits that “you can make it work”, many advisers will fail.

“They think it’s easy, but I can tell you it’s not,” he says. “If we went down the path of individual licensing, it would be a bigger disaster than it is now.”

TOPICS:   Association of Financial Advisers (AFA),  Financial Planning Association (FPA),  individual licensing

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