Financial planners are facing the prospect of much tougher and coordinated disciplinary arrangements as a result of the appearances of the Financial Planning Association (FPA), the Association of Financial Advisers (AFA) and the Australian Securities and Investments Commission (ASIC) before the Royal Commission.
Senior counsel assisting the Royal Commission, Rowena Orr QC used her summing up of the appearances to point to the significant gaps which exist in the regulatory and disciplinary regime and to suggest scope for significant improvement in the future.
In particular, she suggested that the obligations under the Corporations Act may have been set at too high a level of generality to be capable of actually being enforced.
Orr said this then raised the question of what alternative obligations would be more appropriate and whether the current division of responsibility for professional discipline of financial advisers between employers, ASIC and professional associations was operating effectively to ensure that financial advisers faced appropriate consequences for breaching their statutory and professional obligations.
“Does that division of responsibility create gaps in the disciplinary system?” she asked. “If so, what are they? Is it possible to implement a single system for professional discipline of financial advisers? Would structural changes to the financial advice industry be required to bring that about?”
Orr also quested whether a system of licensing at both an individual and an entity level would be more appropriate than the existing system of licensing only at the entity level.