FINSIA looks to UK for proposed co-regulatory model

The Financial Services Institute of Australasia (FINSIA) has proposed a co-regulatory model for the financial advice industry as what applies to accountants, lawyers and engineers.

In its submission to the Quality of Advice Review, which was separate to its joint submission with other industry groups, FINSIA said the accountant regulation model would serve as a valuable guide for the evolution of the regulatory framework in respect of financial advisers in Australia.

“We recommend that work be undertaken by the Quality of Advice Review team to explore the features of the co-regulatory model that currently exists within the accounting profession, and other similarly structured professions such as lawyers and engineering, to determine if the government believes such a model may serve as a valuable guide for the evolution of the regulatory framework in respect of financial advisers in Australia,” it said.

The organisation said it would be willing to play an active role in the oversight of its members in the financial advice sector, and that it expected its peer group of professional bodies would be prepared to play a larger and more expansive role with their members.

FINSIA said it was aware that comparable co-regulatory oversight models existed in other jurisdictions such as the United Kingdom.

In the UK, the Financial Conduct Authority (FCA) provided headline oversight for more than 50,000 financial services firms. FINSIA said the FCA’s strategic objectives would be considered very closely aligned with the objectives set for the Australian Securities and Investments Commission (ASIC) in Australia.

The FCA required that all retail investment advisers held a Statement of Professional Standing [a form of public practicing certification] which could be awarded by one of seven different professional membership bodies in the UK market. The Statement of Professional Standing required three core criteria to be satisfied, being:

1. Completion of an FCA-recognised qualification in respect of providing financial advice;
2. Completion of periodic continuing professional development obligations; and
3. Adherence to a code of conduct and the ability to demonstrate ‘fit and proper’ standing to provide financial advice.

The model employed by the FCA encompassed a periodic review cycle of the seven awarding membership bodies, aimed at ensuring that the frameworks were being administered in a manner that was consistent with the regulator’s standards and expectations.