The requirement for financial planners to hold an Australian financial services licence (AFSL) to provide advice should be replaced with a more bespoke system focused on individual registration, the Financial Planning Association (FPA) has said.
FPA chief executive Dante De Gori said: “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.
“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 an update on its website, the FPA recommended the establishment of a single disciplinary body requiring the registration of all financial planners, which would include verification they had complied with the professional standards set by the Financial Adviser Standards and Ethics Authority.
“Registration can be more bespoke, based on the skill, education and experience of the individual providing the service, rather than their licensee,” De Gori pointed out.
“Registering with the single disciplinary body and maintaining accurate information on the register should be the individual responsibility of each financial planner, not their employer or licensee.”
While the current AFSL system should no longer be a requirement for financial planners to provide advice, it could be maintained to oversee the provision of financial products and some services, the FPA noted.
It also recommended existing requirements linking the regulation of financial advice to financial product recommendations be reviewed in order to better reflect the industry in its current form.
“Future regulation of financial advice should focus on the broad nature of contemporary financial advice and not limit its focus to financial products,” De Gori added.
“The law should be changed to separate the regulation of financial products from the regulation of financial advice.”
Last week, the FPA announced changes to its strategy and corporate structure, reflecting a shift in focus for the professional body.
Last month, it welcomed the federal government’s deferral of the implementation of measures relating to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry as a result of the coronavirus pandemic.
