The FPA wants to see new reference checking protocols extended to individuals providing general advice, warning that some advisers are circumventing ASIC bans by going into management.
The Reference Checking and Information Sharing Protocol would create strengthened reference checking during the recruitment of financial advisers. But the FPA noted that it will only apply to advisers who will potentially be providing personal advice to retail clients under the new licensee, and said that it wants to see it extended to other parts of the business.
“The FPA has clear examples of financial advisers who have been banned from providing financial advice by ASIC who move into management overseeing the provision of financial advice by employed or authorised financial advisers of the licensee,” the FPA wrote in its submission to the Treasury.
The application of the protocol is significantly broader in relation to credit licensees, and applies to “a mortgage broker or a director, employee or agent of a mortgage broker”.
The FPA recommended extending the protocol to individuals employed or authorised by AFSLs to provide general advice, as well as those with the responsibility or ability to influence the advice process and those in management and directorships, including responsible managers.
“Like all industries, there is also mobility in the financial services industry whether individuals may move across the sectors within financial services,” the FPA wrote.
“The FPA suggest consideration should be given to extending the principles of the reference checking requirement to all AFSLs.”
The FPA also wants one-off government funding to be made available to ASIC so that the watchdog can maintain a register of “designated reference checkers”, potentially incorporated into ASIC’s existing Professional Register for AFSLs.
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