The SMSF Association has applauded the federal government’s intention to establish a single disciplinary body for financial advisers in an effort to streamline the regulatory advice framework.
“We support the policy intent to simplify the regulatory environment for financial advisers. The changes, set to take effect on 1 January 2022, will assist in removing some of the additional layers of complexity around multiple registrations, regulatory bodies and codes,” SMSF Association chief executive John Maroney said.
“It is an important step in raising standards, providing consistency and simplification with the use of a single body – the Financial Services and Credit Panel (FSCP) within ASIC (Australian Securities and Investments Commission). Its role is to monitor, review and where necessary discipline the sector.”
Maroney acknowledged the FSCP will strengthen the integrity of the financial advice sector, as well as provide greater consumer protection in the long term.
He described the initiative as a critical reform for the financial advice sector, but suggested setting up the FSCP should not be the only step in the formation of a new disciplinary system for advisers, a point highlighted in the association’s submission responding to the government’s consultation draft legislation to implement recommendation 2.10 of the financial services royal commission.
To this end, he called on the government to remodel some of the proposed measures so they can be used as the first steps in enabling broader regulatory reform regarding financial advice.
“Individual registration of financial advisers and the inclusion of tax (financial) adviser registrations under one umbrella inside ASIC is one such step. These changes will incorporate a fit and proper person test on application and renewal,” he said.
“However, registration should be the responsibility of the individual and not their licensees as the draft legislation proposes. This makes it clear that these declarations are a statutory obligation and not a requirement of the licensee. For advisers, the lines between licensee policies and the law often become blurred.”
According to Maroney, situations where practitioners registered as tax financial advisers based upon specified experience with approved professional body memberships require immediate attention.
“Given the FASEA (Financial Adviser Standards and Ethics Authority) education standards must be completed by 1 January 2026, transitional measures will be required to ensure these advisers can renew their registrations after 1 January 2022 and continue to provide these services,” he noted.
“In our submission we also said it is important that there are clear governance and guidelines to assist industry and consumers understand the role of ASIC and the FSCP in its disciplinary body role. This will be particularly important for the administration of the Financial Advisers Code of Ethics 2019.”
He pointed out providing ASIC with proper resourcing will be critical to the process and encouraged the introduction of consulting panels to ensure the government, its agencies and the industry work together to deliver the optimum outcomes for all sector stakeholders.