The corporate regulator is encouraged by the rate of adviser registrations in the past week and is confident that most, if not all, advisers yet to complete their registrations will meet a deadline it this week extended to February 16.
After the Financial Advice Association sounded the alarm earlier this week that several thousand advisers were yet to fulfill this obligation, ASIC announced late Thursday afternoon it would extend the deadline given the time of year when many workplaces are still in holiday mode.
Newly installed ASIC commissioner Alan Kirkland tells Professional Planner that advisers and licensees alike are taking their registration obligations seriously, and there are only around 4000 still outstanding.
“The encouraging thing is we have seen almost 2000 additional advisers registered in the past week,” Kirkland says.
“We know that many licensees are getting on with this job, and if that rate of registration continues, then all advisers will be registered well before the extended deadline.”
The requirement was introduced in response to recommendation 2.10 of the Hayne royal commission and legislated in 2021, and is separate from the current requirement for AFSLs to appoint advisers to the ASIC Financial Adviser Register once they have been authorised.
It is the licensee’s responsibility to ensure its authorised representatives are correctly and fully registered, but there are penalties for licensees and individual advisers alike if the deadline is missed.
Kirkland says advisers need to make sure they know that they’ve been registered.
“If they go on to provide personal advice to a retail client after [16 February], and they haven’t been registered by the licensee, then there are consequences for the individual adviser as well,” he says.
Kirkland says there is “quite a spread” of sizes of licensee whose advisers have yet to complete registrations and it’s not an issue confined to small licensees or own-AFSL firms.
“We’ve seen small, medium, and large licensees register their advisers to date, and there’s still a mix of sizes of licensees that have yet to take that step,” he says.
Kirkland stresses the deadline for adviser registrations will not be extended again.
“The final piece of legislation to allow us to open registrations was only enacted on the 27th of November and we of course opened the registration process the very next day,” he says.
“In that context, we were very loath to provide any extension; the only reason that we have done so is because part of the registration period coincided with the holiday period in Australia and so we thought it was reasonable to give people a few extra weeks in light of that timing. But that is the only extension that will be granted.”
ASIC has been targeted by some quarters of the licensee community for enforcing a registration deadline some see as unreasonable, but Kirkland says it’s the law, the deadline has been known for considerable time, and “it’s important to understand where this requirement came from”.
Kirkland adds it was a recommendation of the Hayne royal commission.
“In recommending [an adviser] registration requirement, Commissioner Hayne said that other professions like the medical and legal professions have individual registration requirements,” Kirkland says.
“Given the stakes in relation to financial advice, he felt it important to apply a similar requirement to financial advisers. We encourage the profession to understand the rationale and the royal commission report and to say this is something that’s ultimately of value to the profession.”
Kirkland says a regulator will occasionally rise the ire of the industries and sectors it regulates, and he says he is not surprised by the criticism ASIC receives.
“But I would say that we’ve got very open and constructive relationships with the key industry associations,” he says.
“That’s critical to ASIC being able to regulate the profession effectively and to those organisations being able to help their members to comply with the law.”
The complexity of complying with the law was highlighted this week with the release of the Australian Law Reform Commission’s final report into simplifying and streamlining financial services regulation under the Corporations Act.
Kirkland acknowledges the complexity of the law ASIC is required to administer.
“I don’t think it’ll be a surprise to anybody that the ALRC’s key observation is that the law that applies to the financial services sector is extremely complex,” Kirkland says.
“But like everybody else, we’re still working our way through the detail of the ALRC report and ultimately we’ll wait to see what the government response [is] to that report, which I imagine might take some time.”