Registration, qualifications and continuing education

In the wake of the GFC and several large financial advice scandals, there is a very strong push to require a higher level of education from financial advisers. The Financial Systems Inquiry and the Parliamentary Joint Committee (PJC) have both recommended that financial advisers must hold at least a bachelors level qualification and meet more onerous ongoing professional development requirements.

The Government has also committed to launch a Register of Relevant Providers in March 2015. The recent PJC report has also made some recommendations about what the register should record.

Such reforms appear to have broad support on both sides of Parliament. No details of implementation or firm timelines have been released yet, although the PJC report contains recommendations. We anticipate that a transitional period will apply, where existing financial advisers will be able to register with ASIC regardless of existing qualification status, then gradually requiring all advisers in the industry to attain higher qualifications than are currently required.

Limited licensing

Although the accountants' exemption does not cease until 30 June 2016, many accountants will need to make a decision about the future of their business this year in order to prepare for the relevant deadline (in particular, to ensure that relevant staff obtain RG146 qualifications).

Most accountants are now faced with the decision to either:

  • forgo SMSF-related business and decline to be authorised under a limited AFSL;
  • become an authorised representative of an AFSL and lose a level of autonomy in their business; or
  • obtain their own limited licence and incur the related compliance costs.

This is an issue for financial services professionals as well, many of whom have referral arrangements or other professional relationships with accountants and are wondering how to safeguard their own businesses if these accountants can start offering a level of financial advice.

As the deadline approaches, we anticipate that many more accountants will be seeking advice about how to navigate the new regulatory regime.

Fintech and emerging technologies

We are receiving an increasing number of calls from people interested in taking advantage of emerging financial markets, whether that be:

  • using new technologies to provide traditional financial services (such as shortterm loans via ATMs, or financial advice that is largely automated via the internet);
  • branching out into digital currencies;
  • peer to peer lending; or
  • crowd funding.

These areas do not fit neatly into existing regulatory categories and are posing policy issues for ASIC and ASIC is traditionally fairly reactive when it comes to addressing developments in the industry. The Financial Systems Inquiry report had strong recommendations in favour of fostering innovation in the financial system, including recommendations that:

  • a public-private sector collaborative committee be established to facilitate financial systems innovation; and
  • fundraising regulation evolve to facilitate crowdfunding for both debt and equity.

We anticipate that emerging financial technologies will continue to be a dynamic area in 2015.

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