FAAA’s warning sparks adviser panic and anger at ASIC

In a statement on Wednesday, the Financial Advice Association Australia (FAAA) said nearly 6,000 financial advisers are yet to be registered with the Australian Securities and Investments Commission (ASIC) despite the passage of legislation in November 2023 and with the deadline looming. Those that fail to register, the body said, are at risk of no longer being able to provide advice.

A central registration requirement for financial advisers was originally introduced in the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021 and was due to come into force from 1 January 2023, however, it has since been delayed several times.

Since ifa first reported the FAAA’s warning, ASIC has bowed to pressure, announcing in a statement late on Thursday that it would extend the deadline by two weeks, to 16 February, but reiterating that this extension would be its last.

While the responsibility lies with the licensees to register their advisers, as the previous deadline of 1 February approached, and with many individuals still savouring the joys of summer and on leave, it appeared that licensees may had inadvertently neglected the task.

However, in its statement on Thursday, the corporate regulator stressed the severity of the situation noting that advisers who provide personal advice to retail clients without being registered after 16 February, together with their authorising AFS licensee(s), will be in breach of the law and face potential regulatory action.

“After the revised deadline has passed, ASIC will begin a program to check compliance with this requirement and will take enforcement action where we identify advisers who have provided advice while unregistered,” said ASIC Commissioner Alan Kirkland in the regulator’s statement.

Speaking to ifa on Wednesday, prior to ASIC’s extension, Adele Martin, founder of My Money Buddy and The Savings Squad podcast, said the FAAA’s warning prompted her to check whether she was already registered by looking up her adviser record on the Financial Advisers Register (FAR).

Namely, the FAR now has a new field in the first section on “Registration status”. According to the FAAA, if this is showing as ‘Registered’, then there is nothing further required. However, if it is showing as ‘Not Registered’, then it is essential that advisers immediately contact their licensee to confirm the process to complete registration.

“Six thousand seems like a lot, considering there’s only like 16,000 advisers left,” Ms Martin told ifa.

Ben Marshan, founder of Ben Marshan consulting, noted in a LinkedIn post on Wednesday that there’s been “a lot of conversation” this week about registering and, consequently, a lot of confusion.

“The delays, the use of a system that only licensees can access and having to manually register each individual professional, and the timing coinciding with the holiday period has led to a lot of confusion, uncertainty, and just missing when the deadline was,” Mr Marshan told ifa.

But despite this, Mr Marshan clarified that a professional registration obligation for an individual adviser is an “essential step” in recognising that financial advice providers are professionals.

“It’s critical to check if you are already registered; if not, make a declaration to your licensee ASAP and follow up with your licensee to ensure they have registered you,” he advised.

A notable sense of confusion among advisers, coupled with outright indignation towards ASIC, was also evident in ifa’s comments section.

Namely, one adviser wrote that this is a “perfect example” of how ASIC earned its reputations as asleep at the wheel.

“ASIC should be disbanded today and replaced FRESH from the ground up with people who can be trusted to have the best interests of clients and their chosen advisers. Anything less is a continuing insult to taxpayers who finance the current sad farce named ASIC,” the reader said.

A second reader expressed a similar sentiment, writing: “Just ASIC being ASIC. Deliberately keeping it low key, to trip us up. Waste our time with more red tape”.

One reader also pointed to technical problems with the regulator’s website: “A functioning ASIC website would probably make this list of outstanding advisers a lot shorter ... it has been a very frustrating experience”.

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