Centralised practicing certification needed to ensure advisers are 'fit and proper', says firm

Insignia has recommended that advisers are issued with a “practicing certificate” by a central regulated body to ensure all advisers are subject to the same requirements and assessed against the same level of standards.

In its submission to the Quality of Advice Review, Insignia said this would “improve confidence and trust” in advice.

“Consumers should know their adviser has been assessed as fit and proper by a regulated body that ensures all advisers are subject to the same requirements,” the submission reads.

“This body or bodies should issue practicing certificates,” Insignia continued.

The model the firm is proposing would see the AFSL regime remain, but the body or bodies that issue the practicing certificate would ensure advisers are “fit and proper”, meet initial and ongoing training requirements, and have no unpaid AFCA determinations or serious compliance concerns.

“Advisers would be unable to be authorised or employed by an AFSL or registered with the single disciplinary body unless they had a practicing certificate,” Insignia explained.

It suggested that the certification process could mirror that adopted by other professions, such as solicitors and accountants.

“Insignia Financial believes consumer needs exist along a continuum and the regulatory system does not currently meet consumer needs. This leads to poor client experience and a lost opportunity for Australians to benefit from receiving financial advice to improve their financial wellbeing,” the firm said.

“The changes to advice regulation suggested above would help ensure more Australians seek and receive quality advice that is accessible and affordable, to help improve their financial wellbeing,” it added.

Late last week, the minister for financial services backed the Quality of Advice Review, emphasising the “important opportunity” it provides to “streamline and simplify” the regulatory settings.

Mr Jones disclosed that as part of delivering on the government’s commitment to ensure Australians have access to “high-quality and affordable financial advice”, he recently met with the independent reviewer Michelle Levy.

“I am pleased with the progress of the review, and the significant contribution that the financial advice industry, consumer bodies and regulators have made to the review’s progress to date,” Mr Jones said, adding that he supports the review continuing under the current Terms of Reference.

“I look forward to receiving the Review’s final report and recommendations on 16 December 2022,” the minister noted.

Alongside the review, Mr Jones said he remains committed to “looking at reforms now to assist financial advisers in being able to meet the needs of their clients including the education requirements for experienced financial advisers”.