FPA begins push for planner registrations to replace licensing

3 June 2020

The Financial Planning Association (FPA) wants the current system of Australian Financial Services Licence (AFSL) to be replaced by a professional registration for financial planners.

The FPA has made the call part of its five-year policy platform which it claims would represent a significant overhaul of how financial planners are licensed.

Announcing the policy push, FPA chief executive, Dante De Gori said the law should be changed to focus the AFSL system on the regulation of financial products and remove the requirement for an AFSL to cover the provision of financial advice. 

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“While the AFSL system plays an important role in regulating financial products and services, recent reforms have focused the regulation of financial advice at the individual practitioner level,” he said.

“This is an appropriate approach and acknowledges the relationship between a client and their financial planner is a personal relationship, not one between an AFSL and the client. Future reforms to the regulation of financial advice should occur through the professional standards framework and rely on individual registration of financial planners.

“In this context, the FPA believes the continued use of the AFSL system to oversee the provision of financial advice duplicates regulation, creates significant additional regulatory cost and introduces potential conflicts between the views of the licensee and the professional judgement of the financial planner.”

“The AFSL system should be maintained to provide regulatory oversight of financial products and some services,” De Gori said.

“The future regulation of financial advice, however, should occur through individual registration and oversight, and not require an AFSL for a financial planner to provide financial advice.”




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Well done FPA, 100% right way forward.

I agree Licensees have failed time and time again to put the clients best interests first, the classic example is the approved product list why does IOOF have the vast majority of IOOF products on their APL are we really to believe out of the vast range of investment products only IOOFs are the best this goes for AMP as well

and then when you have these compliance teams telling you what is compliant or not for your clients it’s a joke I actually asked some basic questions about my client to the compliance officer who was giving me a hard time about an SOA and he couldn’t even answer some simple questions about the client so how can they know what’s best for the client when they don’t even know the client.

Licensees are just an unnecessary cost to planners and they provide ZERO benefit to the planner or Clients in fact they add to the cost to the advice you provide to the client so they actually make the clients worse off

Abolish licensees have a central body that fulfil the function Of qualification, FASEA exam and CPD verification.

Accounting firms that are Tax agents still have the requirement for PI but yet they don’t need a license to provide this for them so why can’t we do that as well

Essentially there is no need for licensees anymore ABOLISH THEM

Individual licensing will not stop vertical integration. However it will reduce the scope for "compliance" being misused as an adviser coercion tool to push more inhouse product.

Over 13 years ago I had been saying exactly this was required. The AFSL system makes little sense

This needs to be continuously pursued and not just left to sit in Senator Hume's drawer. Hopefully the AFA comes out with something similar to show that this is what the majority of adviser's are seeking.

Agree 100% with FPA. This is necessary for the professionalism of financial advice. Sooner the better.

Hooray! Finally they have stated the thing most obvious to all

This will assist in bringing down the costs to consumers.

whilst the AFSL system is flawed, massive cost, little consistency in relation to "how business should be done" and a concentration on protecting the AFSL, rather than enabling the adviser to do business. They do provide an economy of scale, resources and a back up, not available to many advisers.
having said that, being in a true, client/service provider relationship with an AFSL, is VERY appealing

“In this context, the FPA believes the continued use of the AFSL system to oversee the provision of financial advice duplicates regulation, creates significant additional regulatory cost and introduces potential conflicts between the views of the licensee and the professional judgement of the financial planner.” ... this is no truer then when a group of senior mangers/directors on the AFSL own/ have a financial interest in a product/ management investment business as well as own an AFSL which they control the compliance, documents, training and APL which the advisers must use.

'Tell him he's dreaming' !

And how will this solve the difficulty of PI renewal requirements?

I love this approach, and it is the right way forward.

Prior to announcing this, should have been this announcement. "Effective the 1st July 2020, the FPA will be ceasing the Professional Partner Program".
Only then will this article have some direction and the FPA will have purpose.
These are the discussions to have, so on that basis,the FPA needs to be congratulated for putting this forward.

If you read the document it clearly spells out that the adviser will be individually licensed and responsible for the maintenance of their registration. Therefore there will be no more corporates so if this is implemented then the professional partners program will be dead.

agree, but cancel the professional partners first to get the ball rolling, because no AFSLs will take time.

With individual licensing, corporates will still exist, and advisers will still be employed/controlled by them. Just as happens in law and accountancy. However the employer won't be able to hold the individual adviser to professional ransom as they can now with corporate based licensing.

Professional Partners program is an unrelated issue. But it should go anyway, as it gives rise to a perceived conflict of interest.

Wrong. Professional Partners get the benefit of accrediting their product flogging for FPA CPD Hours. That's how they control and prioritise all the training offered to their aligned advisers which why more than two-thirds of their clients’ funds are directed into in-house products, despite those products making up only around a fifth of approved product lists. The FPA are aware of this but money talks baby!

The FPA and other associations will have to fight tooth and nail if they are serious. The FSC and even the ISA will fight hard to maintain vertical integration of licensing.

There will be a lot of deadwood management in AFSLs that won’t like reading these recommendations from the FPA.

It's a side issue. A distraction. The real issue is the terribly complicated compliance system, with numerous conflicting regulations and old outdated laws. The FPA and others should be pushing for real solutions and not starting on a different issue until the current issues are fixed.

Ok then. Nominate yourself for the next FPA Committee elections, get the votes, get in and get started. Off you go.

H Catanooga, Sorry I feel for the industry, but I am planning to remove myself from it. I am worn out the by the continual changes to "fix things" that fail.

I disagree mostly, the licensees go overboard on legal interpretation of asic guidance to protect their business models, not to enable efficient advice provision. The removal of them, in effect means lower but still grounded compliance work.

I think you will find the FPA is actually pushing for simplification of the compliance system. It is part of a broad range of proposals, of which individual licensing is just one component. The industry press has focused on the licensing issue as the biggest attention grabber, but the FPA proposals are far broader than just that.

Been obvious for several years that this needs to happen. AFSLs can re-invent themselves as purely service providers to advisers. Professional Indemnity should be replaced by a Government scheme, especially since all advisers that have passed the Government mandated FASEA exam have proven their understanding of our ethical responsibilities, so the bad apples have all rotted away and their won't be any claims against a compensation fund. Now the AFA need to come out and agree. Well done FPA, most intelligent view you have expressed in a decade.

Let's think this through. If the planner has the registration - is there an "employing" or "licensing" AFSL involved? The upside of this might be ownership of clients and the accompanying revenue stream. However who then pays for compliance? More importantly whose pockets are at risk in the event of complaints? For self licensed advisers there may not be a big change. For others though - it might be a significant issue. Think about AFCA's comments about adopting the Odious Codious in adjudicating complaints. What bets do we have on planners being vindicated in the new AFCA world? I'm somewhat concerned that for a large number of advisers there will be less dealer group support/responsibility. Perhaps I'm looking at this in the wrong way......

This is an important reform from the FPA. However, it has not mentioned the recommendation by Mike Taylor from Money Management's article of 30/8/2017 that "Mortgages are a Financial Product and Need Advice" which can be seen here: https://www.moneymanagement.com.au/news/financial-planning/mortgages-are.... This is important now that Banks are in the process of divesting themselves of financial planning groups and the possible liability associated with negative equity in housing and the rebuilding of the clients' balance sheets if there is a severe global recession. There is a lesson from the GFC and overseas markets that should not go unheeded. In my opinion, Mike Taylor is right. What do other readers think?

It's off topic.

It can't happen fast enough.

Thank you for that comment. It is not off topic! It is right on the money, see here: https://moneyandpensionsservice.org.uk/. Mike Taylor is right, as are the regulators in the UK. . This is going to be a tough lesson for the FPA and their planners.

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