AFA calls for changes to FSRB
The relationship between advisers and dealers principals is once again in the firing line, as the Association of Financial Advisers (AFA) seeks changes to the Financial Services Reform Bill (FSRB).
The relationship between advisers and dealers principals is once again in the firing line, as the Association of Financial Advisers (AFA) seeks changes to the Financial Services Reform Bill (FSRB).
Under an AFA proposal, mediation provisions would be written into contracts between advisers and principals.
At the moment, advisers specialising in risk operate under the Agent and Brokers Act. The FSRB proposal will subject advisers specialising in risk to the same arrangements that exist between investment advisers and dealer principals under the Corporations Law.
In a recent AFA submission to the joint house committee on Securities and Corporations
AFA president John Hibberd criticises the new arrangements contained in the dealer/adviser re-lationship, arguing that such an arrangement gives dealer principals the power to put advisers out of business.
“In cases we have been advised of, it was the bad management practices of the dealer that caused the problem not the provision of improper advice by the adviser. The FSRB makes no provision to avoid this position. Further, the Bill seems to increase ASIC regulatory power over advisers. The current draft gives ASIC the power to ban an adviser without a hearing, guilty before proved innocent.”
The AFA is seeking some provision for arbitration to be written into contracts between advisers and principals, and has argued that the FSRB should revert to the current arrangements under the Agent and Brokers Act in regard to banning provisions under the Corporations Law.
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