The chair of the parliamentary joint committee (PJC) on corporations and financial services is seeking industry views on the possible return to an individual licensing model for advisers.
At a PJC inquiry hearing in Sydney last week, committee chair and Coalition Senator David Fawcett raised questions about the appropriateness of the current dominant model of outsourcing licensing to a dealer group or licensee.
“We’ve had the proposal put to us on a number of occasions that we should be moving towards individuals holding licences and being individually accountable for the quality of their advice and their conduct, as opposed to organisations holding licences,” Senator Fawcett said in questioning outgoing FPA chair Matthew Rowe.
Speaking to ifa, Senator Fawcett made clear that the line of questioning is “not an indication of how the committee might go” in terms of recommendations, but at the same time said a return to individual licensing is not off the table.
“If one of the concerns that is being raised is the conduct of individuals, then the question is ‘how do we best ensure that an individual takes responsibility for their own actions?’ and as you look at other sectors – such as aviation, for example – individual licensing can give the regulator greater ability [to regulate the sector],” Senator Fawcett said.
“The committee is seeking views from industry players about what views there are about individual accountability – it is one possible path – but we are still at evidence-taking phase.”
Committee deputy chair and Labor Senator Deborah O’Neill has also expressed interest in hearing views about various licensing framework options, saying in the PJC hearing that she is concerned there may be a “structural impediment to ethical behaviour” in the status quo.
However, Senator Fawcett explained that while a recommendation to change the licensing model for advisers is not outside the “terms of reference” for the current PJC Inquiry into “professional, ethical and education standards in the financial services industry”, a full risk assessment would accompany any such proposal.
“We are extremely conscious that every time there is a suggestion of change, consumers incur costs and we are acutely aware of that and we are seeking evidence that is in the best interests of both industry and consumers,” he said. “We are not about wholesale change for change’s sake.”
Submissions to the PJC inquiry closed on 5 September and the committee has not yet nominated a due date for its report.
Stimulate new ideas. Stimulate new thinking. Top up your CPD points and hear from industry experts with ifa’s Knowledge Centre. Keep up to date with the latest trends and reforms, all while adding to your CPD hours. Explore the Knowledge Centre now.
IOOF has completed the first phase migration of its legacy platforms and products on new proprietary super and investments platform, Evolve. ...
The Administrative Appeals Tribunal has rejected an adviser’s appeal for review of an ASIC banning order after he failed to show in court. ...
ROAR Software and Fin365 have partnered up for a new integrated solution. ...