FPA questions ASIC licensing system
The Financial Planning Association (FPA) has called for an investigation into the Australian Securities and Investments Commission’s (ASIC) licensing system that allows product providers to hold their own Australian Financial Services Licence (AFSL).
In a submission to the parliamentary inquiry into agribusiness managed investments schemes (MIS), the FPA said a regulatory arrangement in which a product provider also holds an AFSL which authorises representatives to sell a single MIS product should be investigated in terms of its appropriateness.
“A key difference between agribusiness MIS and other financial products is the existence of dedicated sales networks to support sales of investments ...,” the submission stated.
The FPA questioned the quality of financial advice in such cases where an authorised representative was limited to recommending a single product. Financial planners must cover the full suite of client needs and, by definition, cannot be restricted to a single product distribution.
The FPA said consumers might be misled by distribution models that meet the regulatory standards of other participants but are dedicated sales channels for one product.
Financial planners' advice should have a reasonable basis and be appropriate to the client, the submission said.
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