Call for single-product licensing to be banned
The collapse of Great Southern should serve as a salutary lesson to the industry of the dangers of single product licensing of financial advisers, according to CPA Australia's senior policy adviser for superannuation, Michael Davison.
“A key issue coming out of the collapse of Great Southern is that it was able to licence people as authorised representatives on the basis of selling a single product to the investing public.
“As an adviser, how can you properly assess clients’ needs and risks if you are not licensed or authorised to recommend alternative products.
“Are they really acting in clients’ best interest in this instance?"
Davison said the CPA has made the call for this licensing to be outlawed in a submission to the Parliamentary Joint Committee inquiry into corporations and financial services.
He acknowledged that the call had been motivated partly by the experience of having had 80 CPA members who were exposed to the Great Southern licence.
“There were approximately 300 accountants and another 800 financial planners that sold the Great Southern product," he said.
Davison did not know whether there are other providers currently that have authorised representatives on the basis of a single product.
“That’s beside the point, however, as our greater concern is there are organisations out there that can authorise advisers for a single purpose, to sell one product."
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