The Parliamentary Joint Committee led by Bernie Ripoll has recommended the corporate regulator commence immediate work on the creation of a professional standards board for financial advisers, with the possibility the terms ‘financial adviser’ and ‘financial planner’ be restricted to use only by members.
This represents a win for groups such as the Financial Planning Association which lobbied for higher professional standards within the financial advice industry through the accountability that comes with a mandated professional body.
The committee recommended that the Australian Securities and Investments Commission immediately begin consultation with the financial services industry to establish an “independent, industry-based professional standards board”.
The board would oversee nomenclature, competency and conduct standards for financial advisers, the report states.
“This entity would share responsibility with ASIC for establishing, monitoring and enforcing competency and conduct standards for financial advisers,” the Ripoll report states.
“Such an arrangement could also enable the use of terms such as 'financial adviser' and 'financial planner' to be restricted to those qualifying as members and prepared to comply with the conditions imposed by the [Professional Standards Board].”
The FPA had recommended financial planners be defined in legislation and subject to higher standards through professional oversight, including having obligations attached to them through membership of a professional body.
The Boutique Financial Planning Principals Group and the Australasian Compliance Institute also proposed advisers be supervised by a professional body, or bodies, approved by ASIC, while fund managers including AXA and ING Australia also lobbied for such a body.
Treasury said while a professional standards body may have merit, its relationship with ASIC would need to be clearly defined.