ASIC delivers warning to final 757 unregistered advisers

The Australian Securities and Investments Commission (ASIC) has delivered what it called a “final reminder” that all financial advisers who are not registered with ASIC before 16 February 2024 would need to cease providing personal advice to retail clients.

The requirement for relevant providers to be registered was introduced by the Better Advice Act, which was introduced following the Hayne royal commission, responding specifically to recommendation 2.10 to establish a new disciplinary system for financial advisers.

ASIC said that Australian Financial Services (AFS) licensees are required to register their relevant providers “as a priority” via ASIC Connect.

According to the corporate regulator, as at 9am on Tuesday, 6 February, there were still 757 (4.9 per cent) financial advisers who provide personal advice to retail clients on relevant products (relevant providers) not registered with ASIC.

This is a significant improvement since the Financial Advice Association Australia (FAAA) issued a warning to the almost 6,000 advisers that were unregistered on 17 January.

Following this news, ASIC announced it would extend the deadline to register from 1 February to 16 February, and disclosed that as at 9am on 18 January, 4,036 (26 per cent) financial advisers were yet to be registered.

On Tuesday, ASIC also encouraged relevant providers to check their registration status on the Financial Advisers Register to ensure that they are recorded as “registered”.

“If they are not recorded as ‘registered’, they will need to cease providing personal advice from midnight 15 February 2024, until such time as they are registered and noted as such on the Financial Adviser Register. This includes all personal advice as well as ongoing advice services,” ASIC said.

“From 16 February 2024, if a relevant provider provides personal advice while not registered, they will be in breach of a restricted civil penalty provision and the relevant provider’s authorising AFS licensee(s) will have committed an offence of strict liability and contravened a civil penalty provision.”

The corporate regulator also flagged that it would commence a program to ensure compliance with the new obligation shortly.

Speaking to ifa on an upcoming podcast, Financial Services Council chief executive Blake Briggs highlighted that the deadline extension would be a compliance gauge for small AFSLs.

“One of his [new ASIC commissioner Alan Kirkland] first acts was to extend that deadline by a couple of weeks, but in some ways, I feel that is a bit of a test for the small advice businesses on behalf of ASIC,” Mr Briggs said.

He explained that through the extension and the appearance of doing the “right thing”, the regulator has effectively communicated its interest in assessing the compliance standards of small advice businesses.

Mr Briggs suggested that ASIC is essentially conveying to these businesses that the extension serves as a tool to gauge compliance levels. A lack of registration among micro-licenses and small advice businesses would be viewed as a red flag by ASIC, signalling broader systemic issues of non-compliance.

“I would encourage the entire advice industry, but the smaller advice licensees in particular to not give ASIC reason to be concerned,” Mr Briggs said.

“Get on, register in the time available, do everything you can to demonstrate to ASIC that the industry is now compliant and plays by the rules.”