In a statement posted on the Westpac website, Jane Watts, who is general manager of the bank’s BT Advice subsidiaries, said that individual licensing – whereby advisers would be individually registered rather than authorised by a third-party or corporate licensee – was one of a number of reforms that is now required.
Ms Watts proposed that responsibility for individual registration may come under FASEA’s remit, alongside adviser ethics and professional standards.
“There has to be a change to the regulatory and professional construct of the industry, building on existing reforms and modelled on other professions,” Ms Watts wrote.
“For financial advice this could see an expanded role for FASEA, as an independent body responsible for managing the individual registration of financial advisers.
“Individual registration would complement the educational requirements set by FASEA by genuinely professionalising the sector, much like other professionals, such as accountants and lawyers.”
Ms Watts said the reform would likely need to be accompanied by a “fidelity fund” levied by the industry and akin to those in place for legal practitioners in Australia.
The proposal for individual licensing was previously hinted at in Westpac’s submission to the Financial System Inquiry chaired by now-AMP chair David Murray in 2014. The submission suggested that “issuance of practising certificates” become part of the regulatory framework for financial advisers.
Westpac’s support for reform comes despite its ownership of third-party licensees including Securitor and Magnitude, and consultancy BT Select, which assists financial advice practices to apply for and maintain ASIC-overseen AFSLs.
A BT spokesperson declined to answer questions about what impact the introduction of individual licensing may have on these subsidiaries.
In addition to the licensing reform proposal, Ms Watts said the path to professionalism would be aided by an inability for “poor planners to simply move between advice businesses”.
A number of licensees have previously voiced frustration at the lack of information sharing from institutions on advisers seeking to leave their networks, including Dover Financial Advisers director Terry McMaster at the royal commission.
Ms Watts also reiterated the comments made by her colleague Mike Wright at the royal commission that grandfathered conflicted remuneration may need to cease.
“The industry needs to carefully consider the future of grandfathered remuneration arrangements and whatever conflicted remuneration remains permitted under FOFA,” she wrote.
“We recognise that the removal of grandfathering is complex and may have significant implications for some advisers and licensees.
“At the same time, whilst these arrangements remain, financial advisers and licensees will not gain the trust and respect that they seek from the community.”
Jane Watts can start with her own product – BT Wrap Essentials. BT have continually refused to allow advisers to waive the commission and have it rebated back to clients. This has prevented advisers from moving away from grandfathered commissions. Presumably that are now waiting for the Government to turn off grandfathered commissions so they can pocket the money and steal our clients. We can’t move our clients out, due to grandfathered Centrelink arrangements and CGT issues.
So we are being lectured by a bank officer who has been in role for 5 minutes. Where is the great Mark Spiers, the BT doyen?
So BT will employ all these self licenced planners, and then blame them if they fail under their pressure cooker culture.
Anyone be interesting to see what is announced tomorrow.
Jane has a PhD (Organisational Psychology) and a background in HR. Clearly then an expert in superannuation, financial planning and the advice industry.
removing grandfathering only serves one purpose. MORE PROFITS FOR THE CORRUPT BANKS
1. ““Individual registration would complement the educational requirements set by FASEA by genuinely professionalising the sector, much like other professionals, such as accountants and lawyers.” This is not strickly correct and it is disappointing it misleads.
To be a Chartered Accountant orCPA, or IPA, you must have your degree in the correct field with appropriate subjects within your degree. Then you must complete a , for a better word, mentorship/experience period/professional period and pass the specific Body’s exams. Note CPA is different to CA, to IPA. That isthe first point.
Secondly, once you have passed these exams for the appropriate body you want to join, then you have the right to practice , AND, you may also join a partnership of other similarly qualified persons. This creats a “firm” eg., BDO; KPMG; PWC; OA & Co; etc, etc.
2. Now if you want to have a speciality like Auditor, or Liquidator, or SMSF Auditor, etc., you must also register with ASIC and satisfy their requirements in experience and qualification( which you most likely already have to be a CA for example. So it is experience they want to see.
3. If FASEA wants professional bodies; like the equalivant if ICA; CPA; IPA; Qld Law Society; etc to run the processes of educational qualification, so that groups of individuals can join in a ‘firm’, then fine and then if their “SPECIALTIES” like that in the accounting profession ,then direct registration is required with ASIC.
4. I do not see this as a complicated issue. It is a matter of looking at the long established model that exist for acountants; lawyers, and doctors, and engineers, and choosing which best suits this “business”.
No doubt it will be a combination of both like it is in all the other professions.
WHY?
Because it is more cost efficient and the professional bodies can prove it, even dispite several stuff ups over the past 40 years I can speak of.
Right now, FASEA, is caught between a rock and a hard place.
WHY?
Because there is so much vested interest in the outcome, participants will fight for a particular model.
Example; audits for SMSFs every year? Read the comments of those saying “OMG” NO !! They are all businesses with a strategy of SMSF audits!! Of course they want to keep the status quo !!
Look at “trailing commissions”! Of couse the participants receiving them want to keep the status quo !!
Personally, I do not give a tinkers cuss on either issue !! My practice is in both fields and I am in my 60s, and I have structured the practice in such a way that will be marginally effected. And our CLIENTS have always been the most important asset this business has right in front of our staff !! I lose either of those, and my business is DEAD !!
But my BIG concern, is WHO is making this decision? Are they currently in practice? Kelly O’dwyer? O please God NO !!! She has no experience in real life in this area and few have confidence in her, With great respect Ms O’Dwyer., I have seen you speak and read your comments. In this area , I am not full of confidence, quite the opposite.
This is not “anonymous” ! I wrote my name.
Craig Offenhauser
we don’t need to reinvent the wheel. the accounting associations work quite well and have been for a substantial period so we could just use their model
in fact, we might be able to join their ethical code monitoring body APESB as well
Another big solution to a small problem while the big problems are ignored. Financial advice costs A FORTUNE to deliver the process is horrendously complex and coated in trip ups and conflicts. The industry has started removing conflicts and that’s a good step – the next one is simplification. A high cost, highly complex system of low educated advisers is doomed to repeat the sins of the past no matter how they are licensed. Education is shifting up, now we need to make things easier and cheaper to deliver.
Michael, as much as I agree with the premise, until we are actually a profession they wont reduce the complex disclosure requirements. 2024 cant come soon enough, nor can the abolishment of grandfathering.
Reasons this would not work;
1. Licensing fees would need to be a lot higher (which the Industry doesn’t like and is coming anyway)
2. Audit requirements. The suggestion that the Education body audit your files is just silly. Listen to all the noise on this forum about “academics” and imagine all the new conflicts of interest.
3. PI through a Statutory body? I don’t think so! Yeah might as well have VicRoads or NSW RMS insure your car and your Council insure your home.
How truly daft. Only someone with no idea whatsoever would come up with this suggestion.
Yes, and the funniest thing here is that Jane would be out of a job if the Industry followed her suggestion offered here. How disconnected from reality can these Bankers be?
Theres a pretty simple & easy solution here. very adviser has to be registered with TPB. Registration with TPB required membership of a industry association. In two simple steps the industry can be cleaned up & be self-regulating. 1. Ongoing membership with industry association is required as opposed on simply joining. 2. Industry associations step up with reviews & banning for inappropriate advice.
The FPA already has this & has a track record. However they are hamstrung by complaints or problems going via ASIC / Licensee or FOS. So quite simply, all complaints must be reported to your association. The associations get serious with their analysis of complaints & then if they ban someone the adviser is automatically restricted from operating because their TPB membership expires.
All of a sudden we don’t need the epic dinosaur that is ASIC to provide banning orders.
Hilarious. Join the FPA as the solution? Really? The FPA has a track record of self serving, bank sucking, mistake making, membership driven self interest. You’re so so funny. Have you been hiding under a Rock for the last five years?
Here we go again. Turn the spot light on individual planners. It’s not us it’s planners. Here’s a unique idea how about large licensee’s being faced with fines, banned or suspended. That’s after all the purpose of a license. Again we’re turning the spotlight onto individual advisers. Was CBA Financial Planning suspended from operating for even 1 hour a day, a week? No.
We’ve already got individual registration. That’s the ASIC register already in place. What is needed is individual licensing, where the adviser cops the suspension, the ban or the fine with similar penalties on the licensee. The present licensing system is broke, big licensees operate without impunity, and ASIC only regulate large firms on the belief that the message filters through the system in due course.
Individual licencing will remove the need for “” sales orientated managers “” and O dwyer missed that one. ANY manager MUST have the same or better qualifications than planners or NO JOB. its a wonder the RC or the minister has not woken up to this one. Guess what- maybe managers should be licenced as well and be subject to ASIC. Another major issue missed by the RC . maybe BT sees this coming and throwing advisers out.
just maybe they have lobbied behind the scenes.. do you think that these corporates are silly… there is a plan and unfortunately we are the sheep on the back of the truck.
Conceptually this is a great idea. In theory FASEA should be the perfect organisation to individually licence all planners.
Unfortunately FASEA has proven to be riddled with bias and incompetence so far. Perhaps the government could kill two birds with one stone. Wind up FASEA and sack the board, then create a new body with responsibility for education & ethics & licensing, while making sure the new directors are competent and unbiased.
Yep.. the beginning of the end to a failed system.
Advisers gain trust and respect from their clients by their advice and service. Grandfathering commissions will have no impact on these relationships. If Watts wants to raise community awareness of the professionalism of advisers she should stand up for the majority of advisers that have been acting professionally rather than jumping on the bandwagon that the bad apples define our industry.
Removing already grandfathered commissions is a joke, it just cannot happen, I have just last year paid $1.645 Million for a client base that is 78% grandfathered commission sitting in a lot of legacy type products, these clients are being fully serviced by three new additional staff I employed to service this new purchase , including one Snr Financial Planner, the Loan is $30.000.00 per month, and the new wages in addition is more than the annual revenue purchased, I am actually behind and the rest of the business will be funding this purchase for some years yet, do you honestly think I would have purchased this business if I remotely thought that what had been grandfathered would now potentially be unravelled! I think not, how do you think I feel also having to tell these fine new young motivated staff that they no longer have a job and that I have to let them go! why continue to punish people who have done know wrong because of some that have, throw them out of the industry, put them in jail, whatever, but stop punishing good people who have given there all for their clients and this wonderful industry! Thank you.
How on earth is you overpaying for a business everyone else’s problem? Surely with the ongoing changes to the industry and the clear ongoing issues, you thought this was a possibility? Its been a very long time coming and really obvious this was coming.
If you actually service the clients, just substitute the commission for a service agreement charging a fee. Unless of course you bought a grandfathered book with the intention to provide little service like most do and are worried that clients wont actually agree to switch to a fee…
have some empathy – stop trolling people. Some respect would be nice
it isn’t obvious at all, and frankly when we were told (promised) that grandfathered commissions would stay we took them at their word. unless of course lying about everything is now part of the business development play book as decided by government.
Oh Reality -boyo, you are quite naive !! And a fraction pompus !! This has been industry “NORM” for several years. Decades actually! 4, I know of !! I note you did not use your own name. So ,your comments are questionable, underhanded, and duplicitous!! Besides, you have no intestinal fortutude. For you that means you are gutless !!!
Yeah no kidding its been the industry norm, and look where that has got us. We have the perception of used car salesman when we are supposed to be a ‘profession’ and have landed in a royal commission due to this grandfathering/conflict of interest tripe. Some of us actually want to become a profession.
PS: I dont use my real name because whenever I do, I get reported by those who dont like the hard truths.
Reported to whom? You’ve been on this site for ages now and your holier than now attitude is starting to stink. Perhaps you aren’t an adviser and have an ulterior motive?
Also, the RC is due to the banks and the like not this “tripe”. Also to be a profession you must first act like a professional. Taking pot shots at your fellow peers makes you a long way off being a professional so please look in the mirror before pointing a finger.
Professional associations and calls to my business lol. So many advisers out there doing the right thing but so many salty about grandfathered commissions/fees being questioned which is the only reason practices command such a ridiculous valuation (because few actually properly service these clients to the same level as post opt-in). You can throw out whatever conspiracy theories you want, some just was the industry to be a profession and the cowboys out of it. Too many ‘built’ a ‘successful’ business by just buying grandfathered books and letting them pay off the loan before doing it again without servicing the clients… Its now clear those people are fighting to preserve their archaic business model…
Mate, pull your head in and stop bashing those that don’t fit into your model of how you think things should be done.
…and you seem like someone straight out of uni who has never been in the real world.
I agree.. it is always the big corporates calling for the grandfathering commission to cease.. I wonder why… extra profit in their pockets (surprise surprise).. if the commissions go then all I want to see is a long-term strategy to help businesses transition.
Long-term all that this will mean is that clients will pay significantly more for financial advice… just consider the unintended consequences (which our Politicians, Bureaucrats and Left Wing Lobbyists fail to do!!). Not sure where the industry will end up (in the short term) – destroying planner practices surely cannot be a good thing (and the flow on effect that will cause). I think that if commissions are removed that there would need to be some form of compensation paid (given that the big corporates will be the winners). It is a worry but who cares!?!
The ironic part of removing grandfathering.. it has a significant effect on the new planners entering the industry (as well as long serving planners leaving)…
Yikes Patrick. So sorry to hear about this. Who is your licensee? Sounds like an AMP. Who ever it is I’d be changing because they’ve sold you a bum Steer around education, best interest obligations and what this means and the resulting impact on the future of financial advice. One other point. Wages and Loan repayments more than the revenue?. Are you sure? You see folks this is why we can’t have a Financial Planning degree as the sole entry standard. You see learning what the contents of a FSG should be, compared to understanding Income and Expenses learned via a Commerce, Business degree are just as important here. All the best with the venture.
While I have sympathy, if they are in a grandfathered product and they are not there for grandfathered Centrelink etc, more them or rebate the trail and charge a fee for service, particularly if you are already servicing them.
You will have time, do it now.
Correct… A business with 70%+ clients in grandfathered arrangements just means they havent been serviced. There are some exceptions with centrelink clients but certainly not 70%.
It should also be much easier to ban or suspend planners !
BT don’t want the responsibility of advisers – thats why. They just want distributors of their products – never have placed much value on actual advice unless a product flows out the other end.
Totally agree Papa, licensees imo offer very little value for what they charge
Large Licensees = policies and service are setup for the lowest common denominator = a drag on higher quality firms
individual registration is the only way forward. this is already happening but will happen on a mass scale