Paraplanners get set for regulation

Contract paraplanners may be painted into a corner under proposals being consid-ered by the Australian Securities and Investments Commission (ASIC).

Paraplanning outsourcing businesses may be forced into a major overhaul of their business structure under the proposals which seek to provide a regulatory structure for contract paraplanning.

Contract paraplanners may be painted into a corner under proposals being consid-ered by the Australian Securities and Investments Commission (ASIC).

Paraplanning outsourcing businesses may be forced into a major overhaul of their business structure under the proposals which seek to provide a regulatory structure for contract paraplanning.

A draft policy paper currently being written is likely to propose paraplanners hold their own dealer’s licence or gain a proper authority through the dealers they write plans for. Since paraplanners working on a contract basis are not directly dealing in securities, some have suggested they may not qualify for a dealer’s licence. They fear that instead, paraplanners who provide outsourced services to a dealer group will have to hold a proper authority through that dealer group. As most contract paraplanners work with more than one dealer group, the planned changes could prove an administrative nightmare, as well as place the paraplanner in the position of holding proper authorities with competitor dealer groups, according to some.

Roger Rosentreter, director of paraplanning group IFP Solutions, says the proposed changes could have far reaching consequences for contract paraplanners.

“If…ASIC is looking to regulate outsourced paraplanning operations such as our-selves, we believe that this could become commercially untenable for all parties including our clients,” he says.

ASIC senior policy officer Dhammika Amukotuwa says final details of the draft policy paper are not yet been finalised. However, she confirms a review of licens-ing requirements for paraplanners will be included in the paper, as the outsourcing of paraplanning is becoming “quite a common game” in the industry.

“All I can say is we’re looking at various market participants and reviewing their licensing activities — whether they need to be licensed or need to hold a proper authority,” she says.

Nina Hope, director of Queensland-based Paraplanning Professionals, says her main concern is for the issue to be resolved so paraplanners know where they stand.

“All paraplanners that outsource their services at the moment, if not already authorised through the dealer they are doing work for, will be affected. I am unsure as to how many that will be, yet I don’t believe it will be detrimental to how they operate,” she says.