The Financial Planning Association of Australia (FPA) has welcomed the federal government’s proposed Better Advice bill, which will create a single personal registration system for financial planners, but said there is room for improvement.
The government has put forward the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 to implement recommendation 2.10 from the financial services royal commission to create a single disciplinary body and implement other additional measures aimed at strengthening the financial advice sector.
In particular, the FPA lauded the provision to require financial advisers to be personally responsible for their own registration to the new disciplinary body as opposed to having the licensee register on their behalf.
Under the proposed legislation, the licensee will still be responsible for adviser registration in 2022, but the individual practitioner will be responsible for their own registration in 2023 once the financial adviser register is transferred from the control of the Australian Securities and Investments Commission (ASIC) to the ATO.
In addition to making the Financial Services and Credit Panel the single disciplinary body for the industry and introducing the aforementioned new registration requirements, the bill will create additional penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act, and pass the responsibilities of the Financial Adviser Standards and Ethics Authority (FASEA) over to ASIC.
Further, the bill stipulates tax financial advisers will no longer be regulated by the Tax Practitioners Board (TPB) but instead will be regulated only under the Corporations Act, a move the industry body has identified as requiring more attention because it fails to meet the stated objective of creating a single set of professional standards for financial planners and a single regulatory regime.
“This is a major reform that has already recognised the need to reduce regulatory costs with the winding up of FASEA and the removal of the redundant registration with the TPB. Further changes are needed to ensure that a duplicate set of regulation and the unnecessary red tape this causes is removed in the profession, which will have positive flow-on effects for the affordability of advice,” FPA chief executive Dante De Gori said.
The bill also gives the government the ability to extend the exam cut-off date to 30 September 2022 for financial advisers who have failed the exam twice prior to 1 January 2022.
“The FPA continues to believe that the best outcomes for both financial planners and consumers come about when the government and the profession work together on the issues that we are facing. This is an extensive piece of legislation and the FPA will continue to work through the details with the government,” De Gori noted.