The financial advice industry would benefit from a move to individual licensing but tilts at reform will likely be obfuscated by the institutions and regulators, says a business broker and analyst.
Connect Financial Service Brokers chief executive Paul Tynan has issued a strongly-worded statement adding to calls for reform of the AFSL regime to move financial advisers to an individual licensing model, similar to that in operation in the US.
“As the advice sector moves to a ‘true profession’, the only way forward and test for the validity of non-institutional influence is through the eyes of the public – and it is inevitable that individual adviser licensing will be the preferred model,” Mr Tynan wrote.
“Individual AFSLs would immediately lift the public perception of advice, the industry as a whole and be the catalyst for a revolutionary change to the dealer group model.”
However, Mr Tynan suggested that efforts to move to this beneficial licensing model will be held back by vested interests such as the institutionally-owned licensees and even ASIC itself.
“Ironically, the individual adviser AFSL concept will not only be resisted by the institutions because they will lose influence and control of their distribution networks – but also regulators fearing a resultant massive escalation in their workload,” he argued.
The M&A consultant also reiterated his longstanding argument that BOLR payments are an example of a grievous conflict of interest found within the existing licensee model.
In October 2014, ASIC official Joanna Bird told an SMSFA function that individual licensing would have some oversight benefits for the regulator’s monitoring activity, but that the organisation will “deal with the regime that is dished up”.
A parliamentary inquiry in that year examined the issue of individual licensing for financial advisers, but ultimately decided not to recommend reform.
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