How ASIC’s ‘clunky’ double-up registration process punishes honest mistakes

According to Phil Thompson, who is the responsible manager of Victorian advice licensee Sky Money, which authorises Skye Wealth and its advisers, the punishment for an honest mistake stemming from confusion shortly after additional registration requirements came into force is overly harsh.

Last week, the Australian Securities and Investments Commission (ASIC) announced that it had issued infringement notices to two Australian Financial Services (AFS) licensees that had failed to register financial advisers as authorised representatives.

Skye Money was one of these licensees, with Thompson detailing that the error occurred in April 2024 – just two months after ASIC had rolled out the new registration requirements in February that year – and related to a new financial adviser.

“I had previously registered our current advisers as ‘relevant provider’ when this came out with plenty of time to spare so I knew how to do this,” Thompson explained.

“I honestly thought ticking the ‘financial adviser’ box covered it all. Why? Because when you’re in the ASIC Connect portal (how AFSL register advisers), it slaps ‘Financial Adviser (Relevant Provider)’ right there on the screen — like it’s one and the same!

“The description even says this role is someone authorised to give personal advice to retail clients, which matched what I thought I was doing by registering on the FAR.”

When ASIC notified Thompson a few months later that the adviser was on the FAR but not separately registered as a relevant provider, he immediately updated the registration and “spent the next 12 months working with ASIC to understand why it happened”.

Stressing that he has “always tried to do right by our clients” and the $31,300 fine was a “wake-up call”, Thompson added there was no consumer harm involved.

“No clients were left in the dark or without consumer protections. Our adviser was always on the FAR, just not double-registered as required. It was a genuine slip-up, and I’m the one who dropped the ball,” he explained.

Alongside the multiple hoops that licensees need to jump through, Thompson also pointed out that the ASIC media release itself conflates financial advisers and authorised representatives.

“In this media release, we have used the term ‘financial adviser’ and ‘relevant provider’ interchangeably,” it said.

For Thompson, this is an ironically humorous addendum to the process, and that this confusion is evidenced in ASIC’s own communications.

“I’m not here to make excuses; I messed up as the responsible manager. But we can all agree that this whole relevant provider and financial adviser is very clunky and the mixed-messages on ASIC's websites don't help,” he said.

“I’m not shying away from this. It’s on me to know the rules inside out, and I didn’t. We’ve since tightened up our checks to make sure this doesn’t happen again and we have authorised four more advisers since this date and believe me, I've triple checked we did it correct every single time.

“But let’s be real – the financial services world is drowning in red tape.”

Fairer fines and simpler rules

Thompson went to great lengths to stress that he made the error and accepts the outcome, adding that the “hiccup” has made Skye a better organisation, however the double-up of registration requirements is just another unnecessary compliance hurdle.

“I reckon ASIC could make life easier with a single, clear registration form that covers both ‘financial adviser’ and ‘relevant provider’,” he said.

“Why make us go through two separate registrations, confirming the exact same qualifications and authorisations on each one when a bit of streamlining could stop these slip-ups?

“And maybe, just maybe, regulators could ease up on fines for good-faith errors – while cracking down harder on the big scandals that wipe out millions. I’m not saying let me off the hook, but a warning might’ve fit better than a $31,300 fine, given how new these rules are.”

He added that ASIC was easy to deal with at least, even if the punishment still “feels a bit harsh” in the context of numerous large-scale financial failures.

“This has been a rough lesson, and I’m grateful ASIC worked with us to sort it out. I’m sharing this to keep it real – mistakes happen, but the system could use some tweaking too,” Thompson said.

“Let’s encourage our regulatory environment to help licensees like me stay on track without drowning in over regulation and requiring teams of compliance consultants to help us follow the rules, while still nailing the bad actors. That’s the win for all of us, especially the clients we serve.”

The move to introduce a secondary registration requirement and the confusion that advisers and licensees faced was a key criticism of the move when it was being introduced, though ASIC commissioner Alan Kirkland told ifa in January last year that the regulator had done everything it could to smooth the process.

“These requirements have been known about since 2021, but the final piece of legislation that allowed us to open the registration portal was only enacted on 27 November last year, and the very next day, ASIC opened up that portal for registration and started communicating with the industry, providing information about how to go about the registration. That included hosting two webinars, and we’ve also been dealing with any inquiries that people make individually, as well as talking to the industry associations,” Kirkland said at the time.

“We’ve tried to explain this process as clearly as possible to people, and to get information out as soon as we were able to about it”.

He also referred to the royal commission and Kenneth Hayne’s finding that two registers are necessary as the reason for the additional requirement.

“In the final report, commissioner Hayne said there was already a register, but he thought it was important to take that extra step of introducing a professional registration process,” Kirkland said.

“He said that would be comparable to what applies in other professions such as the medical and the legal professions, where practitioners are required to be registered and to make certain declarations about their fitness and their qualifications in order to carry out that profession.”