The FPA has vowed to fight CLERP 6 proposals which allow accountants who are members of professional bodies to operate outside the licencing scheme.
The FPA has vowed to fight CLERP 6 proposals which allow accountants who are members of professional bodies to operate outside the licencing scheme.
Under the CLERP proposal, an exemption from holding an financial services licence will be allowed when a financial service is provided by a person who is a member of a declared professional body (DPB).
The DPB may be recognised by ASIC providing the members are adequately trained and supervised; there is a compensation scheme for losses by clients; and an internal and external dispute resolution procedure is in place. The body must also have adequate powers to discipline and remove members.
FPA chief executive officer Michael McKenna says that while the association welcomes the introduction of a single licencing system, the DPB exemption is a key concern.
“The FPA supports the adoption of a single uniform licencing system, but we see the declaration of self-regulatory organisations as a retrograde step,” he says.
“This will undermine the level playing field concept through different standards of entry and conduct which will create inconsistencies and gaps when compared with the full licencing requirements.”
FPA professional standards senior manager Ken Breakspear, who prepared the association’s submission on CLERP 6, says many DPBs don’t have the same standards so CLERP will allow “a soft regulated approval” to members of some of these bodies gaining an Australian Financial Services Licence (AFSL).
“It also gives a competitive advantage to accountants and actuaries as they will only need a bit of training to get a AFSL,” he says.
Breakspear says you only have to look at the mess the UK got into a few years ago with self-regulation and that should serve as a warning for Australia.
“The FPA is very concerned about the structural weaknesses in the self regulation model and the fact of its apparent failure in the United Kingdom financial services system (giving rise to a single licensing framework),” the FPA’s submission says.
Breakspear says the proposed legislation only requires DPB members to be “adequately trained”.
“This seems more akin to the training of authorised representatives and not the standards of entry for licensees, which should include relevant competence, skills, experience and sufficient resources (including financial, technological and human resources) and adequate risk management systems necessary to properly provide the financial services,” he says.
