Key Australian Licensee Firms Respond To New FPA Policy


The Australian FPA policy recommending that a professional registration for individual financial planners replace the current system requiring an AFSL to provide advice, is “…a surprise and ill-considered…”, say six key licensee firms in a statement.

The statement says that comments attributed to the FPA CEO Dante de Gori in the media “are at odds with the facts”.

The statement’s summary says: “The FPA policy is a surprise and ill-considered given the hard work that the entire advice sector has put in to overcome historic shortfalls brought to light by the Hayne Royal Commission and in light of the leading work that AFSLs bring in areas of education, risk mitigation, compliance, consumer best interest measures and commercial support to advisers and their clients.”

It notes that the key areas of cost and consumer protection must be understood, thoroughly, and not diminished through poor policy.

The signatories to the statement are:

  • Neil Younger, MD and Group CEO, Fortnum Private Wealth
  • Angus Benbow, CEO, Centrepoint Alliance
  • Grahame Evans, CEO, Easton Wealth
  • Matthew Rowe, CEO, CountPlus Limited
  • Matt Fogarty, CEO, Fitzpatricks Private Wealth
  • Nathan Jacobsen, MD, Paragem

The statement says an investigation of reform of the Corporations Law as it relates to its focus on product, not advice, has merit.

“However, any consideration of this by (Australian) Government must also look at the true costs and consumer protections currently afforded under existing AFSL Licensing obligations.”

Cost of Compliance

The statement points out that any individual adviser has the option to self-license.

“The individual planner that does self-license will incur the set costs of compliance, governance, and a raft of statutory obligations in providing that advice. These costs are not discretionary. They are mandatory and – in the absence of scale – would likely rise to the detriment of the consumer,” it states.

The statement adds that any avoidance of these costs may potentially lead to poor outcomes and contribute to consumer harm.

…increasing Professional Indemnity premiums compounds the cost of managing risk and delivering additional consumer protections…

“On top, increasing Professional Indemnity premiums compounds the cost of managing risk and delivering additional consumer protections. PI is an increasingly prohibitive cost of business, especially for a self-licensed adviser.”

The statement notes that: “Again, costs in relation to compliance with the Corporations Act are not discretionary. The scale, systems & processes, and risk management focus of the AFSL provides an efficient way to deal with the in-built cost of providing compliant financial advice.”

The statement also points to consumer protections saying that the AFSL system plays a significant role in the oversight of financial advice (that is not limited to product).

“Licensees have played and continue to play a crucial role in developing, training, educating, and supervising licensed financial advisers.”

It says that this monitoring comes with scale benefits relating to interpreting and adhering to regulations, guides, and standards, translating these requirements into processes, procedures, documents, Statements of Advice, and the audit programs that ultimately protect clients.

“Additionally, licensees provide capital protection in the event of poor advice or importantly, remediation when needed, in the event there is no recourse through the adviser.

“Licensees have their own professional standards and risks to manage, placing these additional higher standards on the advisers licensed to their AFSL,” it says.

FPA welcomes debate on its five-year strategy

Meanwhile, the FPA has issued a statement welcoming the ongoing debate and discussion of its five-year roadmap and policy platform “… which has been supported by members and sparked constructive dialogue with industry stakeholders”.

It notes that the 19 reforms outlined in its policy platform support the FPA’s three-pillar strategy focused on members, advocacy, and the benefits of financial planning to Australian consumers.

FPA’s Dante De Gori says the policy platform has a five-year horizon and he is pleased to see so much early engagement from industry and government.

“The FPA Policy Platform has 19 critical recommendations for reform that are aimed at reducing regulatory duplication for financial planning professionals, lowering the cost of advice and helping more Australians access advice,” De Gori says.

He noted that the policy positions calling for the future regulation of financial advice to occur through individual registration and oversight, rather than an AFSL system, has “…triggered important discussions among the industry as we work together to create a better operating environment for financial planners and their clients.

“Individual registration is an innovative concept for financial planning but not for other professions. It should not be confused with self-licensing or individual licensing under the existing AFSL system, which would still result in a duplication of regulation and unnecessary costs for financial planners.”

The statement says that FPA acknowledges that licensees continue to play a crucial role in developing, training, educating, and supporting licensed financial planners.

De Gori says licensees will continue to be needed to provide business development services, technology, education and many other services that give value to financial planning practices.

“Removing the AFSL requirement for financial planners won’t change this,” he says.

“The AFSL does not make the planner, just as the hospital does not make the doctor, nor the law firm the lawyer. Individual financial planners are the ones who provide financial advice and the regulatory system should focus directly on their professional qualifications and behaviour.”

The statement concludes that the FPA looks forward to more discussion of its five-year strategy “… and working with industry and government stakeholders to identify innovative ways of improving the profession for all financial planners and their clients”.