The Financial Planning Association (FPA) is hopeful that the government will take on board its proposal for financial planner registration to be a personal responsibility, and not submitted by an Australian Financial Services Licensee (AFSL) or tied to employment, in amendments to its Single Disciplinary Body for Financial Advisers draft Bill.
The FPA has made the recommendation in its submission on the Bill and FPA head of policy, strategy and innovation, Ben Marshan, says the proposal – which is something the FPA has supported post Royal Commission - is ultimately about consumer protection.
Power to the planner
“The individual financial planner needs to have individual responsibility … and they need to be able to push back against licensees when the licensee is asking them to do something that is not in the interests of the client,” he says.
It is all linked to the industry’s ongoing drive towards professionalism.
“At the moment the licensee has most of the power in the relationship, they decide when to authorise you, they supervise you,” Marshan says. “They can put undue pressure on you to provide advice that is not 100 per cent in the interests of the client ...so there is a conflict there.”
Licensees can still add value
He still sees a role for the licensee structure, even with the current industry trend for financial advisers to move away from large licensees and start up smaller firms with like-minded financial planners.
“We still see a strong place for the licensee structure, [they can deliver] support in terms of audits and compliance assistances, strategy support, and potentially support with technology. You need all of these things and licensees are well placed to deliver them but they should be delivering them to an individual with an individual registration,” Marshan says.
In its submission, the FPA pointed out that a personal professional registration is common in other professions.
“Rather than show that the financial planner has a job, a professional registration should demonstrate that they have met their professional requirements, are in good standing and are ready to be engaged by an AFSL or financial planning business.”
“A financial planner’s registration should then follow them throughout their career and be a valued symbol of their professional status and commitment to uphold professional values,” the FPA’s submission stated.