A move to individual licensing of advisers would be welcomed by licensee heads who are content with being service-only providers, but the industry has bigger regulatory priorities to tackle according to a panel.
While it is currently only a potential change and not something the ALRC has committed to recommending, the removal of Chapter 7 from the Corporations Act could be a prompt for individual licensing.
Madison Financial Group managing director Jaime Johns said among all the other issues in the industry, a move towards individual licensing for advisers shouldn’t take precedence.
“To throw a grenade right now and get everyone self-registered is not the right moment. We really need to think about the landscape and get some stability in before doing that.”
However, the consensus on the panel was that individual licensing for advisers world is inevitable. Diverger managing director Nathan Jacobsen said it’s not a surprise to anyone that licensing is challenged.
“It’s because of a whole bunch of overreach where you have to overextend yourself to worry because of the risk something blows up.”
Jacobsen alluded to cybersecurity as one of those examples, a problem RI Advice encountered which concluded with a $750,000 fine from ASIC.
He added that while it may be easy to talk about getting rid of corporate licensing, the reality is much more complex.
“Every day advisers come and ask for our services and they pay them, so we see licensing as an important part of the service proposition.”
However, Jacobsen said if all an entity does is run a license… “it’s not a great way to make money”.
In terms of survival for licensees, Johns said it ultimately comes down to being a partner advisers know they can trust for crucial services.
“As a licensee, at the end of the day if you know why your advisers are partnering with you to start with and they value the services and the solutions you’re bringing to them then you’re much [better] equipped for what that future might look like.”
The Financial Planning Association has advocated for the removal of AFSLs but FPA chair David Sharpe said removal of corporate licensing isn’t a “silver bullet” but one part of an overall solution to improving the regulator landscape.
“The one magic word we need to discuss when we talk about licensing is trust. Does the regulator and decision-makers trust advisers? If they don’t then tell us what we need to do to earn that trust.”