Financial Planning

Individual registration problematic

SIAA individual registration

An industry body has suggested a move to individual registration for financial advisers is another one-size-fits-all solution unlikely to succeed.

The Stockbrokers and Investment Advisers Association (SIAA) has said it does not support a system of individual registration for financial advisers, noting similar one-size-fits-all approaches to regulations have not succeeded in the past.

SIAA chief executive Judith Fox told selfmanagedsuper small firms can benefit from individual registration, but stockbroking and investment advice firms are typically large businesses that operate in global markets.

“Our reason for not supporting individual registration is that firms have a large number of advisers and it is not logistically sensible for the registration obligation to be devolved to individual advisers,” Fox said.

“We understand why financial advisers support individual registration because if you are a small business and there is five in the practice, it is a very different business model.

“The idea that all financial advice services have the same business model and a one-size-fits-all approach is going to operate about the spectrum, it just does not work and we saw that with the education standards.”

Further, she pointed out the singular approach had failed with regard to the education standards and while a majority of industry participants have confirmed individual registration has worked with lawyers, she highlighted there are no licensing regimes for that profession.

Additionally, while the numerous requirements in order to obtain professional indemnity insurance have been challenging for financial advisers, she said: “It will become even more difficult if the licensee cannot provide evidence to the insurer of its active oversight of adviser registration.

“Member firms are subject to this insurance and there is an obligation on the licensee to have an active oversight of the registration process. But when we move to individual registration, then there is a conflict.

“There are real challenges with professional indemnity insurance and we do not want to create more, so we need to really think through all the implications of this.”

While there have been doubts regarding Treasury’s Quality of Advice Review, she affirmed it could be an opportunity for the industry to reconsider its future.

“The Quality of Advice Review is a great opportunity to step back and think about the future of this industry and about how we want to make sure that financial advice is more affordable and more accessible,” she said.

“The current regulatory framework is not facilitating [these issues] and one of the issues is that we have an ecosystem with a number of different financial advice services that have different requirements.”

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