The financial services industry has thrown its support behind the Government’s proposed enhanced public register of financial advisers.
As part of a deal struck between Senator Mathias Cormann and the Palmer United Party to secure the latter’s Senate vote to retain the Future of Financial Advice (FoFA) regulations, the Government agreed to implement an improved register of financial advisers (see: Palmer Deal Secures FoFA Amendments).
Senator Cormann subsequently released a statement, indicating the Government would establish an industry working group to consider the details of the revised register.
According to Senator Cormann, the industry working group will discuss:
- The scope and content of the register (including a record of each adviser’s credentials and status in the industry)
- Whether reporting obligations are placed on licensees and/or advisers
- Who is responsible for providing information and input of data
- Potential privacy issues
Currently, the Australian Securities and Investments Commission (ASIC) maintains a publicly available listing of all Australian financial services licensees and their authorised representatives. The Professional Register contains basic contact information for the licensee/representative, as well as any license conditions or restrictions that currently apply.
The new register is likely to be extended to employee-financial advisers, and include the individual’s education credentials and status within the industry.
A central register will simplify the selection process for consumers
The Association of Financial Advisers (AFA) said the enhanced register would benefit both consumers and AFA members.
“Research into consumer understanding of financial advice identifies a number of barriers to seeking financial advice,” said AFA CEO, Brad Fox. “One of those barriers is identifying who a professional adviser is and who is not, which includes identifying whether an individual has the legal authority to provide personal financial advice. A central register will simplify the selection process for consumers and help ensure they are getting advice from a professional adviser.”
Mr Fox said consumers should be able to use this register to understand that they are seeing, or going to see, an adviser that can provide the expertise they need.
He added that the AFA hoped the register would include details of professional association memberships and professional designations held by individuals.
“We believe that a member of the public looking at this register will want to see the qualifications held by the adviser including any designations they may have such as the AFA’s Fellow Chartered Financial Practioner (FChFP) or Chartered Life Practioner (ChLP), as well as their AFA membership, meaning they are therefore accountable to the AFA Code of Ethics,” Mr Fox said.
“In this way the consumer gains added assurance their adviser is acting professionally, and advisers will see further benefit from joining the AFA. Professional association membership is an obvious and important point of difference.”
Professional association membership is an obvious and important point of difference
This view was shared by Financial Planning Association (FPA) CEO, Mark Rantall, who said an enhanced register would provide protection for consumers, enabling them to easily identify all licensed financial planners who have an agreed set of credentials.
“Membership of a professional body such as the FPA which has its own strict guidelines, qualification requirements and codes of ethical practice should also form a key factor in a planner’s registration status.This gives consumers confidence that they are dealing with someone who will act in their best interest and is required to adhere to a code of conduct,” Mr Rantall explained.
He said the register, along with the outcomes of the upcoming Parliamentary Joint Committee (PJC) Inquiry into financial planner education, professional standards and ethics (see: New Advice Inquiry Opened), would help advance the profession of financial planning.
“The Government’s commitment to a public register signals their support for a key part of our 10-Point Plan,” Mr Rantall said, referring to the Association’s earlier rallying call for greater professionalism among financial advisers (see: FPA Releases 10-Point Plan for Future Advice Framework).
“When you go to a financial planner you have the right to know you can trust the person you choose. This is a big step in the right direction.”
Education is critical but assessed in isolation does not provide a full picture of the quality and suitability of an adviser
Wealth manager, BT Financial Group, weighed into the discussion, saying it had long advocated for consumers to have access to meaningful information about financial planners.
“We think all Australians should have access to as much information as possible to help them make informed choices about the quality of financial planners across the country,” said BTFG Group Chief Executive, Brad Cooper.
“We believe there are a range of factors that determine whether a financial adviser is right for them. Education is critical but assessed in isolation does not provide a full picture of the quality and suitability of an adviser.
“We have long supported the creation of a public register that would encompass the education, years of experience, employment history and areas of expertise and annual certification results for every financial planner in Australia.
“Most importantly we would like to see a customer rating for all advisers that would be widely accessible by all Australians,” Mr Cooper said.
The Financial Services Council (FSC) also gave its support to the initiative, saying it was a sensible and practical move to ensure consumers can check the credentials of advice providers.
“We look forward to working with the industry group on the development and implementation of this important measure,” said outgoing FSC CEO, John Brogden.
Any move to increase professionalism and transparency in the financial advice sector is good news
Industry Super Australia similarly welcomed the proposal.
“Any move to increase professionalism and transparency in the financial advice sector is good news for the Australians we represent, and on that basis ISA support this enterprise by the Government,” said ISA CEO, David Whitely.
However, he added that the ISA remained disappointed that the Government’s FoFA regulations had been retained.
“Our determination to see the vital consumer protection elements of the FoFA laws restored will not wane,” Mr Whitely said.
The Opposition has made another attempt to disallow the FoFA regulations, but the motion was postponed until Parliament sits again in August (see: FoFA Regulations Remain in Place, For Now).
