AFA calls for greater consumer protection
TheAssociation of Financial Advisers(AFA) is seeking direction from Government, and in turn theAustralian Securities and Investments Commission, on guarantees to protect consumers in the event of licensees having their licences suspended or cancelled under the Financial Services Reform Act (FSRA).
AFA president Robin Yates believes consumers are at risk in circumstances where ASIC suspends a licence, given licensees or authorised representatives are likely to have a number of incomplete client transactions on the go, many of which may be time sensitive.
“A decision by ASIC to suspend a licence (even if only done in extreme circumstances) has the potential to ruin the lives of clients and destroy the value of a representative's business,” Yates says.
Yates argues that ironically “the powers given to ASIC are so extreme that they have the potential to destroy the financial objectives of consumers at the stroke of a pen”.
Yates makes the analogy with the life insurance industry under the Life Insurance Amendment Act 1984 (LIAA) and the Insurance & Superannuation Commissioner (ISC) with regard to the administration of a particular life company.
“The LIAA gave powers to the ISC to appoint an administrator for judicial management of the company without necessarily winding up or suspending the business, [as] the winding up of a life company requires a court order… life agents working as representatives of a life company in those circumstances do not suddenly find themselves unable to work,” the AFA says.
Yates stresses that this is a far cry from the power granted under the FSRA to ASIC, which can suspend the licence of a licensee without having to apply to a court, although ASIC says this will only happen in extreme circumstances.
Recommended for you
Licensing regulation should prioritise consumer outcomes over institutional convenience, according to Assured Support, and the compliance firm has suggested an alternative framework to the “licensed and self-licensed” model.
The chair of the Platinum Capital listed investment company admits the vehicle “is at a crossroads” in its 31-year history, with both L1 Capital and Wilson Asset Management bidding to take over its investment management.
AMP has settled on two court proceedings: one class action which affected superannuation members and a second regarding insurer policies.
With a large group of advisers expecting to exit before the 2026 education deadline, an industry expert shares how these practices can best prepare themselves for sale to compete in a “buyer’s market”.
