A national register of financial advisers, which the government pitched as a key weapon in its fight to boost consumer protection, will operate on an honesty system with zero oversight.
The Australian Securities and Investments Commission confirmed on Wednesday that it is on schedule to launch the government's new national register of finanical advisers, which will be accessible online from ASIC's MoneySmart website, on March 31.
In a statement ASIC said the project was well advanced and that the government "intends to make regulations relating to the register in coming days".
Consumers and employers will be able to access details of all persons employed or authorised – directly or indirectly – by Australian financial services licensees who are authorised to provide personal financial advice to retail clients on investment products.
However, it will remain the responsibility of consumers to ensure the information provided by their adviser is correct.
ASIC referred queries about the appropriateness of instituting an additional layer of compliance for honest planners, which offers no protection against dishonest ones to the office of the minister responsible, Assistant Treasurer Josh Frydenberg.
Mr Frydenberg was unavailable for comment before deadline.
"Consumers must take responsibility for not only checking their planner is on the register but interrogating them about the details provided," Financial Planning Association chief executive Mark Rantall said.
He urged consumers to ensure they received a financial services guide and use a free service provided through the FPA website, to verify the qualifications and membership information provided by planners on the national register.
An exposure draft released by Treasury in November scrapped a couple of fundamental pieces of information from the original proposal for the national register: a financial planner's qualifications and whether they belong to a professional body.
In December, Treasury confirmed that the register of financial advisers would include these.
It was revealed on Wednesday the licensees have been granted a three-month extension to provide the register with details of adviser qualifications, training courses and professional body memberships. This information will be added to the register between 23 and 30 May 2015. ASIC said the delay was to provide licensees with additional time to gather the information.
Banks launch own services
Finance Minister Matthias Cormann announced plans to establish the register by March in October 2014 in the wake of a Senate inquiry that heard of gross failures by the Commonwealth Bank of Australia to crack down on "rogue" financial planners in its ranks who, motivated by commissions, provided advice that was not in the best interests of clients.
A number of industry players pre-empted the establishment of the national register with their own online look-up services. The Association of Financial Advisers and Westpac Banking Group both launched initiatives in October.
Confirmation from ASIC that phase one of the register will be in place by March 31 came one day after the regualtor secured a jail term of up to six years against a previously banned former ANZ financial adviser found guilty of a $5.9 million fraud.
On Tuesday a former ANZ financial adviser Melinda Scott was sentenced in Sydney's Downing Centre District Court to a minimum jail sentence of three years and 10 months for seven fraud offences, committed between 1989 and 2012, related to the misappropriation of 163 clients' funds worth $5.9 million.
Commenting on Scott's conviction, ASIC deputy chairman Peter Kell said he was hopeful the new register would help prevent such crimes in the future.
Scott had previously been banned from providing financial advice for 10 years in 1996, but because that ban had lapsed, was imposed by a now defunct regulatory body, and did not include superannuation products, it is likely her future employer and clients were unaware of it.
"We hope the new register will make it harder for advisers with a bad record who move around to slip through the cracks," Mr Kell said.
For about 10 of the 23 years during which Scott stole from clients she was employed by Millennium3, an entity wholly owned by ANZ Banking Group. ASIC has commended the bank for its swift response, co-operation with investigators, and moves to compensate victims.
A spokesperson for ANZ said the bank has also completed a review of the processes and the circumstances surrounding the incident and "materially strengthened" its hiring processes.
Author: Sally Rose
Source: Sydney Morning Herald