FPA offers licensees an olive branch of sorts

9 June 2020

The Financial Planning Association (FPA) has sought to offer an olive branch to licensees over its adviser registration proposals, with chief executive, Dante De Gori, arguing licensees will continue to play “a crucial role in developing, training, educating, and supporting licensed financial planners”.

Confronted by push-back by six key licensee chief executives about the FPA’s proposals for adviser registration to supplant authorisation under an Australian Financial Services License, De Gori sought to emphasise that it was early days and all part of a five-year plan.

The six licensees had questioned the FPA’s proposed approach and its ultimate impact on client best interests, noting the high cost of professional indemnity insurance, the importance of regulatory compliance and the necessity of continuing professional development.

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“The FPA Policy Platform has 19 critical recommendations for reform that are aimed at reducing regulatory duplication for financial planning professionals, lowering the cost of advice and helping more Australians access advice,” De Gori said.

“One of our policy positions is that the future regulation of financial advice should occur through individual registration and oversight, rather than an AFSL system. This has triggered important discussions among the industry as we work together to create a better operating environment for financial planners and their clients.

“Individual registration is an innovative concept for financial planning but not for other professions. It should not be confused with self-licensing or individual licencing under the existing AFSL system, which would still result in a duplication of regulation and unnecessary costs for financial planners.

“The FPA acknowledges that licensees continue to play a crucial role in developing, training, educating, and supporting licensed financial planners.”

De Gori said licensees would continue to be needed to provide business development services, technology, education and many other services that give value to financial planning practices.

“Removing the AFSL requirement for financial planners won’t change this,” he said. 

“The AFSL does not make the planner, just as the hospital does not make the doctor, nor the law firm the lawyer. Individual financial planners are the ones who provide financial advice and the regulatory system should focus directly on their professional qualifications and behaviour.

“The FPA looks forward to more discussion of its five-year strategy and working with industry and government stakeholders to identify innovative ways of improving the profession for all financial planners and their clients.”

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The FPA is absolutely right to push for a structure around the individual professional adviser. As a Licensee exec for most of a decade it was always a systemic conflict that people who were often not advisers and who had commercial interests not always aligned with a profession were deciding who became an adviser. We need to start with the structure along the lines of other professions and then solve for any problems from that lens. Licensees must become (as most of the execs I speak to already know) businesses that are competing on the quality of their tools and services to assist practices.

The FPA need not be concerned. Those 6 Dealer Group heads will probably not be around in 5 years anyway. By 2026, to run and manage an AFSL, you will likely need to hold the same or better qualifications that the Advisers you oversee - and thank goodness for that as we will then have a profession.

The primary reason most medium-large licensees exist is to be a distribution channel for inhouse products. Sometimes those inhouse products will be clearly branded, widely available offerings like those of AMP & MLC. More commonly these days they will be opaque and restricted offerings like dealer group SMAs or practice administered SMSFs. But the dealer group principle of conflicted advisers recommending inhouse products is still the same.

The cumbersome nature of the existing adviser licensing regime provides an opportunity for inhouse product providers to attract and control advisers to distribute their products, as a trade off for looking after the complicated licensing issues for them. This is why the current overcomplicated system needs to be simplified. It's also why incumbent dealer groups are lobbying for its retention.

Thank you for your apology Dante. We will now reconsider renewing our authorised reps with the FPA and look forward to our dinner with you. Pendolino's again?


It is common place in the modern world for people to voice very loud opinions of what they know nothing about. The insto licensees were a disgrace and have played a massive part in the troubles our industry now faces. In saying this there are a whole heap of new players coming in to try and fix things up and if you think a world without AFSL sounds good you probably are expecting a fat man in a red suit to come down your chimney in December. There is already ramification under the Corporations Law for advisers that don't do the right thing but licensees play an important part in the advice process and to remove them would be simplistic.


Don't mollify the incumbents who continue to fatten themselves off the work of their – terminally liable – advisers.

Can I suggest reading some of the annual reports of the six licensees who signed that letter of protest last week?

There’s a LOT of money washing around the AFSL system and it’s all coming off the back of our work.

Also, if – as stated in that self-serving letter – the FPA’s proposal is counter to the facts, then let's start exploring the 'facts' they're holding on to as their last hope:

How much, in salary, bonuses, share rights, etc, have the management class of AFSLs siphoned out this industry, while its burned?

What’s the combined total of fees paid by advisers to AFSLs on an annual basis? Hundreds of millions? A billion?

How, on earth, does stripping out that extra layer of fees INCREASE costs to clients??

Please name another profession that has a bloated middleman sitting between the professional and their regulator, confusing the issue while employing thousands?

How is having that middleman in place to the benefit of clients?

Given the mess we’re in now, can AFSLs really claim to have been a net benefit to advisers and/or clients? Really?

What’s a reasonable estimate of the net cost across the entire industry of each AFSL having their own interpretation of the laws in place, instead of a centralised body?

I’ve been an adviser for fifteen years and I’m damned if I can explain the structure of this industry to an outsider without having them say “that’s weird – why’s it like that?”.

It. Makes. No. Sense.

Remove the ridiculous mandate protecting these inefficient, ineffective, flailing AFSLs and let them compete as ‘service providers’ on their merits, away from the tariff of their government-mandated centrality.

And once we’ve cleaned them out, we’re coming for the rest of the industry doing a sub-standard job while getting fat off our work (see: software providers, product providers, etc).

Ignore the squeals of the snouts in the trough, and let’s move into the future as a profession.

Bring it on.

To those looking forward to the demise of the AFSL system, can I suggest that you reflect on a variety of matters.
Over regulation would be just the start as this has increased the compliance burden on adivsers 100 fold over the years. The result has seen PI insurers run away with higher premiums and less protection for advisers. How will this be addressed. Have meaningful and practical laws for all. Try removing a law for each new one introduced.
Second these associations AFA FPA AIOFP. What were they doing during the fiasco of over a dozen reviews of the sector, collapses of various investment schemes with regulators going after the adviser and not the promoter. In fact the promoter of any failed scheme and their minions seem to get away from law each and every time. The most recent being the Royal Commission and the culpability of banks, insurance companies and industry funds and their CEO's etc. Where is the protection for consumers. Nowhere, From these associations....crickets. Just kick you the adviser.
Now we attack AFSL's and be careful with this one as the target is now not AFSL's no...its you. The buck stops with you. Simple. But wait a moment, you have to deal with FASEA and AFCA now prononces their undying love for FASEA.
Yes FASEA, another complicated unworkable mess. And I'm saying this from a legal standpoint.
AFCA get rewarded for EACH and EVERY adviser they devour. The problem is not the AFSL. At least they have some semblance of procedure and order to help or try to help you, the adviser. At real fault is the AFA FPA Goverment, ASIC, APRA FASEA AFCA the ATO and over regulation and the resulting mess of PI cost increases.
But the biggest problem is also you the adviser. You seem to grab onto the latest crumb of dissent and turn to finger pointing at every opportunity. Yet it is also you the adviser that is constantly kicked and maligned at every opportunity by those in charge and their enablers who have ulterior motives and you are certainly not part of their objectives. In fact you have been for quite a long time and somehow remain compliant and tolerant of the nonsense around you without any protest, without any critique when it matters and without any objection but finger pointing you have been used to and continue to display.
As a lawyer, I would say that you are the real problem and unless you the adviser actualy wake up. You will continue to be so and your industry will fail. As all regimes of tyranny fail when power is in the hands of a few. This is your industry of financial services. Dis organised, no unified collaboration just finger pointing. Be careful what you are wishing for if you are an adviser. You just might get it. During the 1930's, authoritarian types like Hitler refer to this tactic as DIVIDE AND CONQUER. Those seeking to harm you as an adviser who I sincerely believe is honest and with integrity are deploying this very tactic upon you now. Just as the German people found back then, you are finding out also that yes, this tactic works very ruthlessly and efficiently. The genius is that you do even see it coming. Good luck and best wishes to you. You will need it,.

Thanks for your observations and warnings. Advisers should heed your advice but until advisers stand united we are "dead man and woman walking".

Expecting the same people who got us into this mess to get us out of this mess is wishful thinking at best.

The good new is that Hitler lost the war... take heart advisers. Better educated clients who understand what they are doing and why, delivered with more robust and documented process leads to greater trust and less risk to your business.

If Accountants, Lawyers and Doctors don’t need a licensee then why should financial planners,
All of those businesses require PI and they are to the same high standard in regards to the advice or services they provide. Licensees have failed the client and planners time and time again only approving their own products on the APL requiring onerous SOA that are too lengthy so the clients don’t even understand it and ASIC does not require that they have even provided sample SOAs that they themselves state should be shorter and simpler so clients can understand but the licensee requires this lengthy SOAs just to cover themselves not what is I the clients best interest.

Licensees don’t provide anything we can’t get ourselves the AFA head claims they provide training and education well we can get that ourselves from any CPD provider guess what accountants lawyers and doctors need to do CPD as well but they don’t have a licensee

The AFA head claims licensees provide support that is a complete joke they hassle me on my investment choices for clients wanting me to buy when the market is high and wanting me to sell when the market is low. If I wanted help with an SOA they would charge me a fee on top of the huge amounts of money they already take from my firm.

Abolish licensees this will get rid of the conflict of interest they pose, it will reduce cost which will ultimately benefit the client

The FPA and AFA are both useless and survive only on the back of compulsory membership. The larger licencees should just switch adviser memberships from the FPA to the AFA. At least it might get rid of the FPA and give us one voice instead of two conflicting ones which make our industry look like a joke.

Getting the large licensees to switch their advisers to AFA is actually a great idea. That way the FPA would become a professional association representing independent advisers. The AFA would become an industry association representing product salespeople. Everyone's roles and objectives would be much clearer.

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