ASIC stands firm, insists there was ample communication and time for adviser registration

While it’s widely known that the new registration obligation, initially introduced in the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021, has faced challenges from the outset due to parliamentary delays and the regulator’s technology issues, one undeniable fact remains – the responsibility for completing the registration was never placed on advisers; instead, it squarely rested on their licensees.

Yet, as ifa learnt last week, despite not being accountable for their own registration, advisers could find themselves in breach of the law and may face regulatory action if they continue to offer advice without being registered after 16 February.

As such, for advisers, this registration obligation represents another burden, an unwelcome stressor in an already challenging landscape.

While the Australian Securities and Investments Commission (ASIC) plays a crucial role in this process, commissioner Alan Kirkland assured, in a conversation with ifa on Friday, that the regulator has exerted every effort to streamline and simplify the obligation.

“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,” Mr Kirkland said.

“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”.

While Mr Kirkland understands that the original 1 February deadline coincided with an inconvenient period, he opined that 11 weeks provided ample opportunity for licensees to ensure their advisers are registered.

“We fully understood that part of this registration period coincided with a time when lots of people in Australia take holidays, that was the reason that we were willing to grant another two weeks. All up, with this extension, people will have had 11 weeks to register their relevant providers and we consider that to be a generous time taking into account that holiday period,” Mr Kirkland said, adding that the registration process is “relatively simple”.

Why can’t advisers register themselves?

Last week, ifa heard that the registration obligation was placed on the licensee rather than the individual adviser due to ASIC lacking the capability in their current systems to accommodate the latter.

Namely, Ben Marshan, founder of Ben Marshan Consulting, told ifa that the intent of the legislation originally was that financial advisers would register themselves.

However, Mr Kirkland argued that it always made sense for the responsibility to rest with the licensee.

“That’s consistent with our existing licensee obligation to notify ASIC when they appoint an authorised representative,” Mr Kirkland said, adding that the licensee will also be punished if their adviser continues to provide retail advice while unregistered.

“There are consequences not just for the individual adviser but also for the licensee, so that’s why it’s important for the licensee to play a role in the registration process.”

Expanding on the consequences, Mr Kirkland explained that after 16 February, ASIC will begin a program to check compliance with the requirement, which will encompass licensees as well as advisers.

“We will be identifying those licensees that have advisers that they have authorised to provide advice that aren’t on the register,” the commissioner said.

“Where possible, we will be reaching out to them directly to seek confirmation that those advisers have not provided personal advice to retail clients, and if we become aware that any of those advisers have provided advice to retail clients without being registered, then we will consider enforcement action.”

Why the need for two registers?

Advisers have also faced confusion regarding the necessity to register on two separate platforms – the Financial Advisers Register and the new ASIC register. Answering ifa’s question regarding the reasoning behind this, Mr Kirkland referred to the royal commission and Kenneth Hayne’s finding that two registers are necessary.

“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.

“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.”

Finally, Mr Kirkland reiterated that there will be no further extensions to the 16 February deadline.

“This is a really important requirement with serious consequences if people fail to comply,” he stressed.

ASIC has issued Information Sheet 276 FAQs: Registration for relevant providers, which provides more background information on this obligation.