“We are seeing some licensees using every trick in the book to try to block adviser exits,” AMAFA managing director Keith Marshall said.
“Frankly, this kind of behaviour does not align with the expectations of a modern licensee.”
Marshall said advisers attempting to leave are increasingly being met with financial and procedural roadblocks, including exit fees that are repackaged as professional indemnity run-off cover and the aggressive use of so-called exit audits.
“They insist on conducting broad, long-range file lookbacks when an adviser signals their intention to leave,” he stated.
“Those exit audits are then used as leverage to delay or withhold references.”
Under ASIC rules, licensees must respond in writing to a reference request from a recruiting licensee within 10 business days, or up to 30 days if both parties agree.
“This is an ASIC requirement,” Marshall said.
“However, some licensees argue that because they have not recently audited an adviser, they are unable to provide a reference. If a licensee’s oversight has not been fit-for-purpose, that failure sits with the licensee, not the adviser.”
When advisers remain determined to move on, Marshall highlighted some licensees escalate matters by attempting to undermine the adviser’s next destination.
“Unfortunately, none of this behaviour is new. It has existed in the industry for many years but has no place in a modern licensing environment,” he said.
Marshall said advisers should stay with an AFSL because the relationship delivers real value, including strong leadership, fair commercial arrangements, effective compliance support and a genuine partnership focused on better client outcomes.
“If a licensee is doing its job properly, it does not need fear, delay, or friction to retain good advisers,” he added.
“The relationship itself should be enough. And if a licensee is no longer the right fit for an adviser and their clients, advisers should be able to transition without artificial barriers.”
AMAFA and Marshall last month flagged that some licensees are misrepresenting what are effectively internal cost-recovery fees by labelling them as PI run-off premiums – despite no genuine insurance cost being triggered by an adviser’s departure.
“When licensees label what is essentially a commercial recovery fee as run-off cover, it raises questions around honesty and transparency,” Marshall said at the time.
“Advisers are expected to be open and upfront with clients; the same principle should apply to licensees.”
InterPrac making it impossible for Advisers to leave, after they failed to supervise Shield and First Guardian thieves and benefited from a % share. Disgraceful