The Financial Services Council (FSC) appears to have fallen into line with the long-standing calls of the Financial Planning Association (FPA) for legislative and regulatory restrictions to be applied to the use of the terms “financial planner/financial adviser”.
The FSC’s final submission responding to the Financial System Inquiry recommendations has gone even further, suggesting that “in order for any restriction to be meaningful and effective both terms, financial adviser and financial planner, need to be simultaneously regulated to ensure that the terms are not utilised by others”.
However, the FSC has stopped short of suggesting that those entitled to use the terms “financial planner/financial adviser” need necessarily be members of particular professional associations. Rather, it has pointed to them meeting other criteria.
The FSC submission said it was “supportive of restricting both terms, namely ‘financial adviser’ and ‘financial planner’, to those who:
- provide personal advice to retail clients on tier 1 products/relevant financial products;
- are included on the new financial adviser register; and
- meet minimum education and competency requirements.
“This will mean that anyone who has met the minimum education and competency requirements and is included on the new financial adviser register will be able to call themselves a financial planner or financial adviser, such as an insurance adviser,” the submission said. “Whilst they are able to call themselves financial adviser/planner, we note that they should also be free to refer to themselves by other labels. For example, insurance advisers should continue to be free to refer to themselves as insurance advisers if they wish to do so, even though they meet the requirements to call themselves a financial planner/adviser.
“In order for any restriction to be meaningful and effective both terms, financial adviser and financial planner, need to be simultaneously regulated to ensure that the terms are not utilised by others,” it said.
“For example, if only ‘financial adviser’ is restricted to those providing personal advice to retail clients on tier 1 products and who have met the minimum education/competency requirements, then there is the capacity for others who do not provide personal advice on tier 1 products to use the term ‘financial planner’. In this context, for example, someone who provides general advice could use the label financial planner.”
The submission argued that this would confuse consumers “who are unlikely to understand the difference between a financial adviser or financial planner and this would invalidate any benefits gained from restricting a particular title”.
