Advice industry ‘not a profession’: ASIC

In its submission to the parliamentary joint committee inquiry into adviser standards, ASIC said it still believes a number of “significant changes” are required before the “transaction-based sales force” that is the advice industry becomes a fully-fledged profession.

“While there are people working in the financial advice industry who are professionals, the financial advice industry as a whole is not currently a profession,” the submission states.

ASIC lays blame for this lack of progress towards professionalism on the fact that the industry is “not homogenous”, with a diverse number of occupations represented under the broad advice banner, listing “financial planners, accountants and stockbrokers”.

The submission especially singles out the role played by having a diverse range of “separate industry associations”, which it says causes complications for a range of stakeholders.

“In our view, the proliferation of industry associations is an impediment to the professionalisation of the advice industry, as fragmented representation is inconsistent with a common identity,” ASIC says.

In addition, the submission contends that “competition among industry bodies for members in the financial advice industry” creates a disincentive for them to place sufficient levies on their membership required to conduct rigorous compliance investigations.

In other words, ASIC has accused the associations – by way of competing with each other – of hindering the goal of professionalism, rather than helping it.

The submission also said that enduring conflicts of interest not within the scope of FOFA – such as grandfathered conflicted payments – are also impeding the move to professionalism.

ASIC’s comments to the parliament come despite FPA chief executive Mark Rantall telling ifa in August that the FPA would be shifting focus from professionalism to the public interest, given that the end of “evolving financial planning into a universally respected profession” has now been met.