[The Wrap] A true picture of financial advice about to be painted
It's been a week of big news, but perhaps the most important development has been an announcement around when advisers can start to enter the transitional licensing process.
Friday, July 26th 2019, 2:52PM
Transitional licensing is the first step on the way to full licensing under the newly minted Financial Services Legislation Amendment Act. (Couldn't they have thought of a more user-friendly and descriptive name?)
It's now decision time for financial advisers to decide what they want to do in the future. (If you are thinking about exiting then please complete our succession planning survey here.)
While decisions made for transitional licensing aren't binding on the future they will help the regulators paint a true picture of the shape and form of the financial advice sector.
Other than the AFA population there is no clear outline of what the RFA space, particularly with life insurance and mortgage looks like. Licensing is a good thing and my guess is that the learnings will shape the future make-up of the advice sector.
The regulator, the Financial Markets Authority, is unlikely to want to monitor hundreds of Financial Advice Providers. Nor will it have the resources.
The details of transitional licensing are fairly innocuous (see here) and firms will need to comply to a new set of standards (see here).
While they are innocuous it's a fair bet to say the hurdles to full licensing will be much, much higher. If there are hundreds of FAPs then tougher rules are a lever that can be pulled to reduce numbers.
It's going to be interesting to see what comes out of this first licensing process, including how many firms don't make it over the fairly low hurdle.
In other big news this week Southern Cross has made changes to its commission structure that haven't gone down well with advisers (see here and here).
And of course Boris Johnson is now running the UK – what will it mean for investors? Read on.
| « Transitional licence not a free ride | Mann on a mission to diversify financial advice » |
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