Alan Kirkland (left) and Andrew Inwood

Financial advisers who leave large licensees for the perceived regulatory sanctuary of an own-AFSL arrangement or a smaller licensee might be disturbed to realise that the regulator’s message to them is that they can run, but they can’t hide.

Recently appointed ASIC Commissioner Alan Kirkland will tell the 2024 iteration of the Professional Planner Licensee Summit, being held in the NSW Blue Mountains on 18 to 19 June, that the regulator is not focused solely on the larger end of town, and there’s more to ASIC’s monitoring and surveillance than suggested by the cases that make the headlines.

Kirkland will argue that the regulator has a range of tools available to it to supervise and regulate licensees and their advisers, ranging from court actions at one end of the spectrum to banning, licence cancellation and director disqualifications at the other.

ASIC has often been criticised for focusing its enforcement efforts on the top end of town, with its critics believing this is because it’s only the larger licensees that can bear the cost of scrutiny and client remediation.

Advisers in own-AFSL firms or authorised by small licensees are perceived as getting off the hook. At the 2023 Professional Planner Licensee Summit, CoreData founder and global CEO Andrew Inwood suggested the “next failure is in the individually licensed practices”.

“Let’s say seven out of 10 are great and then two out of 10 it’s a bit hard to see, and one out of 10 they probably shouldn’t be in business,” Inwood told the summit last year.

“Those numbers are pretty rubbery, to be honest, but the capacity for those [few] to destroy value for Australians is relatively significant. I’m not sure how the regulator is going to deal with that.”

Litigation is a resource-intensive and potentially costly activity, but there are other measures ASIC can take, for example, through the Financial Services and Credit Panel, that can be done faster and at lower cost.

ASIC can also examine licensees’ internal dispute resolution schemes, and on their performance under the reportable situations regime (otherwise known as breach reporting) – a particularly salient point, give  that statistics tend to suggest a significant proportion of the licensee community continues to dodge its obligations to monitor advisers and report breaches to the regulator.

Kirkland will also discuss ASIC’s approach to bedding down and enforcing recent regulatory reforms, and its recent work assessing the quality of retirement outcomes, as highlighted in Report 781, Review of superannuation trustee practices: Protecting members from harmful advice charges which has received industry criticism.

Kirkland’s appearance – one of his first since taking over as commissioner – comes amid industry rumours over how much influence the former Choice CEO had over DBFO policy recommendations.

CoreData’s Inwood tells Professional Planner ASIC’s growing scrutiny of the smaller end of the licensee space is real.

He says to date the move to smaller licensees and own-AFSL structures has worked for advisers because “they’re not being observed because the regulator is focusing all the attention on the bigger licensees”.

“But that won’t last forever, and the regulator is building tools to understand how they’re going to be in that space,” he says.

The quality of licensees and how they support advisers to be more efficient and profitable will again be a focus of the summit. CoreData is currently conducting the Future of Advice research and inviting financial advisers authorised by licensees of all sizes to complete a 15-minute online survey to provide opinions and insights to help identify best practice among different cohorts of advisers, and within licensee networks. Advisers who complete the survey will receive a $40 gift voucher, and a first look at the key findings.

Inwood says the research “is about helping construct the future advice models”.

“We know that the next advice model isn’t what the current advice model looks like,” Inwood says.

“Working with governments, regulators, and licensees, this research tries to unpick what the successful future advice models look like, from an adviser’s perspective – not from a regulator’s perspective, not from the licensee’s perspective, but what the advisor needs to be to be successful.”