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Funding for the government's adviser register unclear

Funding for the government's adviser register unclear
How the public register of financial advisers will be funded remains unclear, with the government saying that the money will come via a $5 hike in the annual lodgement fee for Australian Financial Services (AFS) licensees.

A statement from Minister for Finance and Acting Assistant Treasurer Mathias Cormann said: "the register will cost about $5 million to set up and will be funded by increasing the current ASIC lodgement fee for Australian Financial Services licensees by $5 to $44."

However to achieve this figure ASIC would need to collect the extra $5 from about one million AFS licensees. That this will be the only source of funding seems unlikely given that there are currently around 5,000 AFS licensees in Australia, according to ASIC.

At the time of publishing, Cormann's office had not responded to requests from Financial Standard to clarify how the public register of advisers will be funded.

The Minister's statement said that the register will be in operation by March 2015 and detailed that it will include the adviser's name, registration number, status and experience.

It will make public the adviser's qualifications and professional association memberships; the licensee, previous licensees or authorised representatives and the business name.

Other information to be included will be the product areas that an adviser can advise on; any bans, disqualifications or enforceable undertakings and details around ownership of the AFSL and disclosure of the ultimate parent company.

When asked about the funding model for the register, Leapfrog director and financial adviser Dominique Bergel-Grant told Financial Standard that "for licensee holders, the cost margins and the profit margins are very slender; it will be interesting to see how this increase in cost is shared between the licensee and the adviser."

Bergel-Grant said that "this is an excellent initiative for consumers."

However, she added that advisers' competency should not only be measured by their technical knowledge: "skills such as being able to build trust with clients can't be measured. We are the person that clients call when their financial stability is at risk."

The Financial Services Council (FSC), the Financial Planning Association (FPA), the Association of Financial Advisers (AFA) and the SMSF Professionals' Association of Australia (SPAA) welcomed the initiative.

 

Author: Laura Millan

Source: Financial Standard

 

 

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