Unregistered advisers operate in micro and small AFSLs, reveals data

Earlier this year, the chief executive officer of the Financial Services Council (FSC) stated that the Australian Securities and Investments Commission (ASIC) extended the registration deadline for self-licensed advisers to evaluate compliance levels, signalling a redirection of attention towards this group.

Blake Briggs told ifa at the time that ASIC is concerned regarding potential non-compliance in self-licensed or micro-licensed advice businesses, attributing the lack of scrutiny in this sector to resource constraints.

As such, the regulator was reported to be planning to utilise the registration obligation as a measure to assess compliance and determine its next steps.

ASIC has now disclosed that as of 29 February, there were 27 individuals authorised by AFS licensees to provide personal advice to retail clients on relevant products without being registered, with the majority operating under small or micro-AFSLs.

Namely, as many as nine were licensed by a licence that had less than two advisers, five came from a licence with three to five advisers, three from a licence with six to 10 advisers, and four from a licence with 11 to 50 advisers. Just six advisers came from an AFSL with over 51 advisers.

ASIC disclosed this data in response to a question on notice asked during February’s session of the economics committee.

The new registration obligation, initially introduced in the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021, has faced challenges from the outset due to parliamentary delays and the regulator’s technology issues.

Earlier this year, the corporate regulator extended the registration deadline to 16 February, following multiple prior delays of the registration obligation.

Despite issuing warnings about the consequences of failing to register, ASIC has not yet publicised any such punishments.