FPA Calls for Self-Regulation through Association Membership

Holding a membership to a recognised professional association is part of the duty of care advisers should afford to consumers, according to the Financial Planning Association (FPA).

“This is a no-brainer argument,” said FPA CEO, Mark Rantall. “While we welcome the debate, the fact is the overriding weight of momentum is propelling our industry towards a profession. Why? Because a majority of planners and consumers want such an outcome. And our legislators and regulators seek the certainty of dealing with a set of substantive legal, ethical and consumer centric requirements, which they will either endorse or impose.”

He said it would be far better for the industry, and its push to become a profession, if it moved to a self-regulated model where all parties have the full confidence of dealing with professionals operating under a robust code of conduct and professional standards.

Mr Rantall’s comments followed remarks from AMP’s Steve Helmich, who flagged the group’s intention to mandate compulsory professional membership for its advisers.

“We know that this also has a sound economic rationale,” Mr Rantall said. “Licensees with greater numbers of CFPs benefit by reducing corporate risk and incidence of complaints, while substantially improving the client relationship and overall business revenues.

“On any measure it simply makes sense,” he added.

… the overriding weight of momentum is propelling our industry towards a profession

Currently there is no requirement for financial advisers to sign-up to a professional association, but there is soon to be a restriction on the use of the title ‘financial planner/adviser’. The legislation to enshrine these terms in law was introduced by the former Minister for Financial Services and Superannuation, Bill Shorten, earlier this year, with the intention of preventing unlicensed persons from calling themselves ‘financial planners’ or ‘financial advisers’.

In its submission to a committee hearing on the legislation, the FPA called for a more restrictive use of the terms, stating there should be additional criteria limiting its use ‘… to those adhering to professional obligations arising from their membership of a professional body and following a Code of professional practice.’

However, the committee ruled there was to be no change to the legislation, and it was passed by the House of Representatives without amendment (see: Enshrinement Bill Passes House of Reps).

The FPA’s General Manager Policy and Standards, Dante De Gori, said at the time: “The FPA has led the pathway to professionalism in financial planning and holding our profession accountable to higher standards will benefit those in the profession, those looking to join the profession and the clients they serve. It has been a long journey but we are delighted that our call has been heard and this bill has been passed to the benefit of all Australians.”