ASIC crackdown: A double-edged sword for single advisers

Earlier this year, the Australian Securities and Investments Commission (ASIC) intensified its focus on self-licensed advisers, aiming to enhance scrutiny and address potential non-compliance within the sector. This renewed emphasis was confirmed by the CEO of the Financial Services Council (FSC), who pointed out that ASIC’s focus aligns with the appointment of new commissioner Alan Kirkland, signalling a significant shift in regulatory strategy.

At that time, FSC CEO Blake Briggs cautioned that self-licensed advisers might face increased scrutiny under Kirkland’s leadership, as the regulator seeks to tackle compliance issues that have previously been overlooked due to resource constraints.

Speaking on the ifa podcast this month, Lifespan Financial Planning CEO Eugene Ardino applauded ASIC’s proactive scrutiny of self-licensed advisers, noting that while it adds complexity for single practitioners, those doing the right thing have little to fear.

“ASIC’s looking to weed out of the very bad advisers, the very few that there are, in my opinion. So if you’re doing the right thing, I don’t think you’ve got really anything to worry about, which I believe is most advisers,” Ardino said.

However, Ardino acknowledged that being a single practitioner and managing one’s own license poses additional challenges.

“Being a single practitioner and then adding a layer on top of that of running your own licence, I think that is probably an extra challenge because it’s just another layer. If you’re within a licensee community then I suppose you don’t have to think as much about that licensing structure”.

He emphasised that smaller advice practices, especially single practitioners, are not being deliberately targeted by regulators. But, he admits, they may have been “a bit neglected”.

“I don’t think the government’s gone out and say, ‘Well, how can we, how can we weed out single practitioner?’ And if you look at what’s actually been happening, a lot of the legislative changes over the last five years actually gotten rid of, hasn’t gotten rid of big advice firms, but it’s pushed a lot of the large institutional licensees out because they’re finding it too hard,” he said.

“But it has actually also caused a lot of smaller advice businesses to merge or to join forces in some way with some of their peers and set up licensing and stuff. So there’s been an enormous amount of change in structure throughout. So now I wouldn’t say that being targeted, but I certainly would say that a lot of these reforms and a lot of these fixed costs are a lot harder on single adviser practises, in which case they’ve probably been neglected a little bit.”

Ardino asserted that single-adviser practitioners are crucial to the profession’s ecosystem.

“I don’t think we should have a framework that prohibits or makes it overly onerous for those practitioners to function because I think they’re an important part of any professional community,” he said.

To hear more from Eugene Ardino, click here.