The Australian Securities and Investments Commission (ASIC) should be empowered to license professional associations within the financial advice industry to ensure they are the genuine article and not a destination for miscreant planners.
The Financial Services Council (FSC) Leaders Summit in Melbourne was told that just as action had been taken to prevent miscreant planners moving unfettered between dealer groups, similar regulatory oversight of associations was necessary to ensure that planners expelled by one professional body did not simply move to another.
Speaking during a panel session dealing with the powers of ASIC in the context of the advice industry, former AMP executive and now chairman of Affinia, Steven Helmich, said he believed such oversight was necessary in circumstances where not all the organisations seeking to represent the advice industry could legitimately hold themselves out to be professional associations.
Minter Ellison partner, Richard Batten, agreed with the likely need for ASIC oversight in the context of professional associations needing to take on the role of co-regulators.
The panel, which included ClearView managing director, Simon Swanson, agreed that ASIC needed both greater funding and more extensive powers to do its job, but noted that there was a need for it to gain the necessary financial services expertise to enable it to do its job.
Batten suggested that removing ASIC from the constraints of the Public Service Act would go some way towards addressing the recruitment of industry expertise because it would allow the regulator to pay salaries competitive with those in the financial services industry.
ClearView’s Swanson said he believed it was currently too easy to obtain an Australian Financial Services License (AFSL).
“It is too common in financial services that a poor adviser fails a dealer group audit, fails to clean up their act and ultimately gets kicked out of the group only to pop up at another licensee or gain their own AFSL,” he said.
“There is effectively nothing stopping a rogue adviser from applying for an AFSL.”
Swanson said there needed to be harsher penalties for people who did the wrong thing.
“Professional bodies that represent advisers must have the ability to prosecute transgressors of professional standards in a meaningful way including banning from the industry,” he said.
