FPA’s plan receives Hume nod if it delivers a profession

5 June 2020

The Financial Planning Association’s (FPA’s) proposals for individual adviser registration to practice has received a nod from the Federal Government if it is likely to hasten the move towards planning becoming a profession. 

Asked to comment on the FPA’s proposals, which would involve individual adviser registration replacing their authorisation status under a licensee, the Assistant Minister for Superannuation, Financial Services and Financial Services Technology, Senator Jane Hume, made clear the Government’s priority was the formation of a profession. 

She said the Morrison Government was committed to reforms which would move planning from a sales culture to a profession. 

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“There is a bi-partisan, industry led commitment to move financial planning from its origins in a sales culture to a true profession. Australians who put their financial future in the hands of advisers expect nothing less,” Hume said. 

“As Commissioner Hayne said: ‘Making financial advice a profession is important, not merely for its own sake, it is a necessary step to protect those who seek financial advice’.” 

Hume’s comments on the FPA policy move come against the backdrop of a rebuff by six key licensees, five of whom have FPA professional partner status, who claimed they had not even been consulted on the adviser registration move and questioned whether it would be in the best interests of clients. 

It also came amid hesitancy from the Association of Financial Advisers (AFA) which had previously worked closely with the FPA in seeking, with other adviser groups, to form a code-monitoring body. 

AFA chief executive, Phil Kewin said that while his organisation was closely examining the FPA’s approach he believed it would be far from straight-forward involving issues of professional indemnity insurance (PI), regulatory compliance and the workings of any future compensation scheme of last resort. 

“It is complex and there would be a lot of disruption,” he said. 

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Another thought bubble from an increasingly irrelevent body that now do not even seek to represent the industry. Self licensing may have worked 3-5 years ago and provided the channel for advisers who wanted to divorce themselves from institutions and vertical integration. It wont work now as the barrier to entry for the industry (its still some way short of being a profession but is getting there inch by inch) and the cost will be prohibitive. Just because as an adviser you do not have anything to do with the manufacture (or failure) of a product does not mean you will not be looked to by AFCA and the regulators to pay the cost of those failures and good luck with PI.
The FPA had the chance when FSRA came in in 2004 to be a leader in the profession but instead chose to go down the path of pandering to the institutions and where the advisers that are part of the IFA industry cant even take non-monetary referrals the FPA has continued to be funded by the "Professional Partner" institution lobby group.

The FPA really is struggling to remain (become?) relevant. Phil Kewin got it right. There is so much more to consider. ASIC has a register of financial advisers. Why would the FPA think they should duplicate that?

Why would you think the FPA is suggesting they duplicate it?

- Because you currently profit from a vertically integrated licensee and are trying to discredit any attempt to overturn that model?
- Because you got annoyed about something the FPA did in the past and have allowed it to consume your life and obscure your judgement ever since?
- Or because you just couldn't be arsed to read the FPA proposal and decided to make up "alternative facts"?

FPA has not suggested duplicating the ASIC register. They suggested transferring the existing register to the new adviser regulatory body which will be established as a result of the RC. They also suggested transferring all responsibility for financial regulation from ASIC, TPB, FASEA etc to that body so there is one simplified regulatory framework for advisers instead of the current unwieldy mess. And before you start spouting another falsehood, no they did not suggest the FPA would perform that role. Hayne and the government have already made it quite clear it will be a regulator, not an association.

More time being wasted on side issues. The FPA should be using every lever and every dollar at their disposal fighting FASEA on the unworkable Code of Ethics. If it allowed to stand, ASIC, AFCA, the new disciplinary body and class action lawyers will bankrupt and remove advisers one by one. None of us will survive a strict legal interpretation of the code.

Giggity - your point is spot on!! However, it would appear that FASEA are a law unto themselves and even the Minister refuses to intervene in their operations due to their "independence" from government. Kelly O'Dywer has a lot to answer for as it was she that signed off on the way FASEA operates. They have less scrutiny than any other "regulator".

Don't see why anyone would want to water down the conflict of interest standard... but then again I don't get a BOLR, or subsidized licensee's fees and I'm not getting fees from the Accountant or property developer. The explanatory statement is in it self explanatory. I guess if you're BOLR is in jeopardy you'd be pretty cranky about it.

Excuse me while I just spit out my weeties. Standard 3 is insane. There is no financial adviser in the country who could meet it, with every single client, when taken literally (as lawyers will). No other profession is required to meet anything like it. My GP would fail, my lawyer would fail, my accountant would fail, the surveyor I recently used would fail. Having a legally enforceable code which is impossible to meet, is stupid and it moves us further away from being a profession. It leaves us all open to the risk of an oversealous regulator and if class action lawyers get wind of it, we will be forced to repay fees on a bigger scale than the banks fee for no service scandal. BOLR and subsidized fees? Sure they are banned and no qualms from me on that one, but conflicts of interest can be very small and immaterial, like accepting a referral from an existing client, or your accountant or having coffee with a BDM, or investing the the same investment you recommended to a client. All conflicts are banned. You can argue about the degree and whether it would adversely impact clients, but that doesn't matter. They are banned, so you must not act and to do so is breaking the law. It doesn't matter what Glenfield says, as it will be others who enforce the code and they will be looking at the code, not what he says

exactly. saying, "Glenfield did not say that in your argument" is not a credible defense. the judges are at AFCA who will decide. they don't have to follow the law or any precedent. they don't have to follow due process, they don't have to be fair to financial planners.

the most astute financial planners - the 7,000 that left - understood their obligations clearly, and have decided to opt-out

The FPA is an embarrassment and does not consult or survey its own members as to how it should be presenting their best interests rather devise the next " strategy" for their own survival and relevance.
When you have no members, there will be no FPA, so it will be completely irrelevant.

Many advisers have suggested individual licensing. It's not the FPA's brainchild. I would be very much in favour of it. Much of the poor advice has come from conflicted vertically integrated licensees and their BDM foot soldiers. Think of all the study we've had to do and are doing now, much of it laid to waste when you are directed to a limited APL and the licencees self-interested investment philosophy. They are about controlling their auth. reps and minimising their corporate risk. Higher education standards and barriers to entry will help ensure the bad eggs will struggle to enter the industry. Save that $20,000 dealer fee plus any other revenue they pocket from FUM, and put it towards your own business running costs.

Let's individually license the Witch Doctors too. Sorry you don't go from winging about a lousy 3 hour exam, working for some product flogger because they're the cheaper, to all of the sudden look at me I'm individually licensed and it's better now. Just why have you not become individually licensed already when the costs are lower, the support is higher? It's because you felt it was too risky. It's a good idea but individually licensed and connect to a product manufacturer can't co-exist.

I hope you have a calm and restful long weekend Yogi. Given the nature of your comments in various publications over recent days, I think you may need a break.

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