ASIC’s advice register will help to weed out bad apples in the finance adviser business

Stopping the rot: The register of financial advisers will only be as good as employers' breach reporting and recruitment processes.

Stopping the rot: The register of financial advisers will only be as good as employers’ breach reporting and recruitment processes.

The Australian Securities and Investments Commission’s register of financial advisers that went live this week provides details of all those licensed to provide advice on investments, superannuation and life insurance.

The register on ASIC’s MoneySmart website at¬†¬†includes the adviser’s name, registration number, the adviser’s licensee and employment history going back five years.

It shows who owns the financial services licence, including the ultimate owner of the company under which the adviser is licensed. It also shows what products they can advise on.

It also shows disqualifications, banning orders or enforceable undertakings.

It looks as if the register has scored some early wins for consumers with four planners adversely named in the financial planning scandals at the big banks not listed on the register.

These are the planners who were “moved on” from employment with the big banks but who had not necessarily been reported to the regulator and who presumably had gone on to work for other employers.

The absence of the names on the register means that they are no longer working as financial planners.

It is an early indication that the register is working as intended with planners with questionable backgrounds leaving the industry.

A lack of quality control in the financial advice industry and a culture of financial product sales have long left consumers vulnerable to shoddy advice.

The licensing regime requires employers, the license holders, to supervise their planners and ensure their planners are honest, competent and ethical.

But as the scandals at the advice arms of the some of the banks have shown, employers have not been supervising their advisers as closely as they should have been.

The register is a good starting point. But there are plenty of things that the register does not include, such as police checks on planners and whether the planner has ever been bankrupt. And the employment history goes back five years only.

While the majority of planners are professional, there is a small percentage of “bad apples” who continue to move from employer to employer.

The register is really about ridding the industry of these bad apples.

But the register will only be as good as employers’ breach reporting and recruitment processes.

Employers are required to make “breach” reports to the regulator when they find problem with an employee planner that has resulted in, or is likely to result in, “significant” financial losses to clients.

The temptation of employers is to have the bad apples move to another employer with as little fuss as possible.

There are advisers who have done the wrong thing by their clients and been “moved on” and are still working as advisers with other employers.

Yet, they will not have any black marks against their names on the register.

Some employers may value a prospective employee’s ability to sell financial products above other skills. If a candidate has a record of success in sales, problems with their previous employment may be over-looked or minimised.

It is important to understand that there is no guarantee the information on the register is correct.


Henry Sapiecha

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