Individual licensing calls fall short

Despite showing some interest in the subject, the parliamentary joint committee (PJC) on corporations and financial services has not endorsed calls to scrap the authorised rep model and introduce mandatory self-licensing.

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by Aleks Vickovich - December 23, 2014 0 comments

In its report on ‘adviser education and professional standards’, the committee has poured cold water over suggestions that a move away from organisational licensing may be of benefit for the financial advice industry.

“The committee has examined suggestions that each financial adviser be individually licensed rather than licensing organisations,” the report states. “The committee notes that the key objective of this suggestion is increased individual accountability.

“The committee considers that the costs of moving to compulsory individual licensing at this time are not justified given the implementation of systemic defences such as the register of financial advisers and other recommendations made in this report have the potential to address relevant issues currently experienced in the industry.”

The report goes on to suggest that self-regulation through codes of conduct monitored by industry associations and ASIC’s current oversight of the AFSL regime should be sufficient to ensure appropriate behaviour by advisers.

Should these measures fail to “improve standards” in the industry, the PJC recommends the door be left open to re-examine the potential for an individual licensing system to act as a “further defence” for consumer protection.

ASIC official Joanna Bird recently made public comments indicating that the corporate regulator sees some benefits in an indiviudal licensing regime, but added that the government's adviser register provides some of the desired outcomes.