For an individual registration regime to work, the Financial Services Council (FSC) has argued for clearly defined roles between the licensee and adviser, while the Financial Planning Association of Australia (FPA) say those roles are naturally defined.
Speaking to a Senate committee, the FPA welcomed individual registration but said it was important for there to be clarification of the responsibilities of advisers and licensees.
Zach Castles, FSC policy manager – advice, said: “We would seek comfort from the legislation specifying just exactly what their role is in relation to misconduct, by way of timeframes and their responsibilities.
“As we move to a new era of individual registration, clarifying those responsibilities is important but that could be a separate conversation subject to consultation on the technicalities involved, but we would prefer that to be specified as much as possible and as legislation.”
Blake Briggs, FSC deputy chief executive, said the bill was only part of a process of restructuring how the advice industry operates.
“In many ways these on-going reforms have been going back five or six years, so we’re not expecting every piece of legislation to solve all the problems straight away,” Briggs said.
“It’s a complex issue but now that we’ve moved onto the individual licensing for financial advisers where they will be on the hook for the quality of advice they provide directly, we then need to clarify the delineation between what is the licensee responsible for.
“For example, it might be the compliance systems they have in place versus what the adviser on the hook for which will more than likely be the things they individually take care of like the fact finding mission of the client.
“Where there are gaps in understanding who exactly is accountable for different things, we need to make sure we plug those gaps to avoid clients falling through the regulatory cracks.”
Ben Marshan, FPA head of policy, strategy and innovation, said the obligations of the licensee and the planner were so intertwined that there needed to be a process to consider which parts of the advice process belonged to each party.
“Ultimately the practitioner, the provider sitting in front of the client is the one giving advice,” Marshan said.
“In terms of the obligations that should sit with the individual practitioner, those should be the ones that are related to understanding the client, recommending advice in the best interest of the client, ensuring it’s documented in an appropriate way and that it’s implemented in the right way, because ultimately that’s where they have that relationship.
Marshan said there were services provided by the licensee that not only created credible value to the adviser, but also protected the customer.
“Monitoring, supervision, making sure the products that are recommended are appropriate, making sure complaints mechanisms are in place – these things licensees are well placed to provide,” Marshan said.
“There are natural separations there to what the planner does in front of the client and everything else that happens behind the planner.
“I don’t think is the piece of legislation to do it in and I think there’s a journey to go on to get to that point.”
