Financial Services Council submission to the Financial System Inquiry

Click here to view the full version of the FSC’s submission to the FSI.

Summary of Financial Services Council (FSC) recommendations:

• • – The FSC supports raising levels of professionalism and enhancing ASIC’s power to ban individuals

  from managing financial services organisations.

• • – The FSC supports the enhanced register of advisers, as well as increasing minimum education

  requirements for those who provide personal advice to retail clients on Tier 1 products/or ‘relevant

  financial products’.

• • – The FSC supports relabelling ‘general advice’ with ‘general information’ and supports disclosure of

  licensee ownership of the financial advice register.

• • – The FSC recommends replacing ‘general advice’ with ‘general information’.

• • – The FSC recommends that consideration be given to ‘general advice’ remaining a subset of ‘financial

  product advice’ or relabel ‘financial product advice’ to remove the word advice, to ensure that

  someone providing ‘general advice’ or ‘general information’ cannot hold themselves out as

  providing advice in the form of ‘financial product advice’.

• • – The FSC is not supportive of replacing ‘personal advice’ with ‘financial advice’ on the basis that

  ‘personal advice’ better reflects the nature of the advice provided.

• • – The FSC is supportive of limiting the provision of ‘personal advice’ to someone who provides

  personal advice to retail clients on Tier 1 product or ‘relevant financial products’ and who has met

  the minimum education and competency requirements set out on page 22-25 and Table 1 of this

  submission.

• •-  The FSC is supportive of restricting the terms ‘financial adviser’ and ‘financial planner’ to those who:

   provide personal advice to retail clients on tier 1 products/relevant financial products;

   are included on the new financial adviser register; and

   meet the minimum education and competency requirements set out on page 22-25 and Table 1

  of this submission.

• • – Subject to the FSC’s feedback provided in response to the PJC’s recommendation 5, the FSC is

  supportive of many aspects contained within this recommendation.

  Specifically, the FSC is supportive of:

   the enhanced adviser register and a unique identifier which follows an adviser throughout their

  career (even where they have a break and re-join the industry);

   a new adviser being added to the register when the new adviser has met the minimum

  education and competency requirements set out on page 22-25 and Table 1 (noting that

  advisers will be added to the register once they pass the registration exam, even where this

  takes place during the professional year);

   the inclusion of higher qualifications awarded by a professional body;

   the inclusion of information about any bans, disqualifications or enforceable undertakings by

  ASIC, as well as recommending targeted consultation on including material censures or

  limitations imposed by AFSLs, Professional Bodies on the adviser register to ensure further

  disclosure is meaningful to consumers; and

   the register noting that an adviser is no longer authorised to provide personal advice if their

  membership of their nominated professional body is suspended or revoked.

• • – The FSC is supportive of organisational licensee fees reflecting the scale of the advice organisation

  subject to broader industry consultation on fees.

• • – The FSC is supportive of increasing the mandatory education requirements as outlined in Table 1:

  Education and Competency Requirements and for an independent body to establish the initial and

  ongoing education and competency requirements.

• • – The FSC is supportive of ASIC listing advisers on the register when they have met the minimum

  education and competency requirements in Table 1 as confirmed by the nominated Professional

  Association.

• • – The FSC is supportive of ongoing professional development being set by their professional

  association, with the Independent Body facilitating cross industry standardisation. The CPD

  framework should encompass core CPD requirements for all to complete and cater for

  specialisations (such as SMSF or risk insurance advice).

• • – To ensure appropriate funding, the FSC is supportive of an independent body being funded by an

  ASIC industry levy with Ministerial appointees. It is recommended that the Board be comprised of:

   representatives from ASIC and the TPB;

   education providers with knowledge of financial advice;

   experienced individuals from the industry/advisers; and

   independent chair such as an academic.

  To support input from key stakeholders the FSC also recommends that stakeholders have direct

  involvement with the Independent Body via a variety of sub-committees which include:

   professional associations;

   consumer representation; and

   licensees (given regulatory responsibilities imposed on licensees for adviser competency it is

  important for licensees to be able to provide input).

• – • The FSC supports Professional Associations establishing Codes of Ethics which meet Professional

  Standards Council (PSC) requirements. Codes of Ethics should be approved independently of any

  application for recognition as a Professional Association.