Financial planners and advisers are one step closer to having their titles recognised in law, with the introduction of a highly anticipated Bill into Parliament today.
The Minister for Financial Services and Superannuation, Bill Shorten, tabled a new Bill in the House of Representatives that, if passed, would see use of the terms ‘financial planner’ and ‘financial adviser’ restricted by law.
The Schedule 2 of the Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 adds a new restriction to the use of the terms financial planner and financial adviser. Under the legislation, only those persons licensed by the Australian Securities and Investments Commission (ASIC) to provide personal advice in relation to designated financial products are able to call themselves a ‘financial planner/adviser’.
In the explanatory memorandum accompanying the Bill, the Minister explained the reason behind the restriction:
‘Restricting these terms is intended to provide consumers with certainty that a person using the term is authorised to do so under a Licence. The Corporations Act defines and restricts the use of a number of other terms, for example, ‘stockbroker’, ‘futures broker’, and ‘insurance broker’. However, there have been no specific restrictions on the terms ‘financial adviser’ and ‘financial planner’. Through restricting the use of the terms ‘financial adviser’ and ‘financial planner’, the measure will enable the corporate regulator, ASIC, to take specific action against persons who hold themselves out to be financial advisers or financial planners without being able to do so under a Licence.’
The Financial Planning Association (FPA), which has lobbied hard for the enshrinement of the terms, said the introduction of the Bill was a historic moment.
If passed, this will be a great win for consumers
“If passed, this will be a great win for consumers and it strengthens the benefits of the FoFA (Future of Financial Advice) reforms, in particular the introduction of best interest and the removal of conflicted remuneration,” said FPA CEO, Mark Rantall.
“All three of these reforms should not be seen in isolation but as a whole effort by the Australian financial planning sector to turn the corner towards becoming a truly respected profession.”
In March 2012, as the House of Representatives was set to vote on the FoFA reforms, an eleventh-hour deal was struck between the Government and industry stakeholders which saw the introduction of the opt-in class relief amendment. In return, the Government pledged to table legislation by 1 July 2013 which would enshrine the term ‘financial planner/financial adviser’ in law.
“The FPA has long called for ‘truth in labelling’ for the protection of consumers. The tabling of the legislation from the government responds to those calls. We welcome the introduction of the legislation and thank Minister Shorten for honouring his commitment,” Mr Rantall said.
The second reading and vote on the Bill has been scheduled for the next sitting day.
