The development and usage of new forms of digital identification to prove the qualifications of advice practitioners must be consistent and interoperable across federal and state and territory systems from the outset, two professional associations have stated.
The SMSF Association and Financial Advice Association Australia made the call for any new digital or electronic methods to identify the bona fides of advisers and their clients to operate across all levels of government and agencies operating under them to build trust and confidence in the system.
The industry bodies made the recommendation as part of a response to the Department of Finance’s consultation on developing a policy for verifiable credentials (VC), which are a digital representation of physical credentials such as a driver’s licence, university degree or trade qualification.
The submission noted VCs could support professionals to comply with their statutory obligations under the Anti-Money Laundering and Counter-Terrorism Financing regime in verifying their identity as a reporting entity to the Australian Transaction Reports and Analysis Centre (AUSTRAC), as well as confirming the identity of clients.
Additionally, VCs could be used to verify the authenticity of qualifications held by financial advisers to ensure they met the legislated education standard.
“VCs have the potential to deliver significant benefits, including greater trust, enhanced privacy control and improved portability of information,” the submission stated.
“However, these benefits will only be realised if VC development and use are supported by a robust and trusted framework. It is therefore important that a Commonwealth VC Trust Framework is established to provide confidence, consistency and clear expectations across the ecosystem.
“While the Digital ID and Verifiable Credentials Strategy was developed jointly by the commonwealth, state and territory governments, its success will depend on those jurisdictions adopting and applying the VC Trust Framework in a consistent way.
“If interoperability is not achieved, verifiers and holders of VCs may be required to navigate different systems and processes at both the state/territory and commonwealth levels, reducing the efficiency and trust benefits the framework is intended to deliver.”
The two associations also noted safeguards had to be high to protect individuals and businesses.
“This is particularly important given AUSTRAC’s recent updated risk snapshot of Australia’s financial crime landscape, which found that criminals are increasingly using AI to facilitate illicit activity, including fabricating identities,” the submission added.
“The framework should provide sufficient flexibility to accommodate emerging technology while ensuring appropriate safeguards for privacy, identity protection and fraud prevention, and should avoid unnecessary duplication with existing legislative regimes.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason