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Keeping up - but not with the Kardashians

Education is one area we need to spend more time on than we have previously budgeted and considered, although we all knew it was coming.

Thursday, May 27th 2021, 10:35AM 7 Comments

by Jon-Paul Hale

Sorry, far less interesting than reality TV, though more critical.

However, I don't think many appreciated how complex it might get - but more on that in my next column.

The number of hours spent on CPD isn't a straight line, your mileage may vary.

This ties into what I watched last week, after the Financial Service Provider Register (FSPR) emails to a significant number of advisers.

One thing I noted was the reasoning was a little confusing and wasn't well explained. This is relevant as we're all going to have to upskill on how the mechanics work to ensure we don't screw it up.

So what happened, and why was the message confusing?

The impact was Dispute Resolution Scheme (DRS) providers got lots of calls about membership which were not related to them but the actions of the FSPR.

Looking back to March 15, when the new rules came into effect, the FSPR deleted all of the DRS records for financial advisers. Unless you had changed, these hadn't been updated in years. And for FAPs they hadn't been set up yet.

When this was done, most didn't notice, and there was a reason for it. The DRS provider linking now happens at the Financial Advice Provider (FAP) level, not the Financial Adviser level (FA), so there is no need for the FA to have the DRS record.

So while we were all focused on FAP's and linking to FAP's, which many still hadn't done by May 18 when the FSPR email went out, the FSPR was watching DRS records.

MBIE confirmed it had suspended the 10-day requirement from March 15 for some time, two months it would seem by the messages.

The other aspect of this is that many are under the impression that after June 15, the de-registration process would be started (the FSPR site says the 16th, which I think is a full three months from the date you could link your FA, which was March 16).

So when the email from the FSPR came out initiating the de-registration process due to missing DRS provider, everyone called their DRS. Who had no idea what was going on.

Which is the point needed here. You have until three months after March 15 to link your FA to a FAP. That is supposed to be a hard date. As March 15th was the end of applying for your TL, we have the same linking to a FAP.

However, the notice on May 18 wasn't about de-registering FAs it was about de-registering FAPs. Yes, this appears to be focused on the DRS record of the FAP, not the FA record.

These emails have also been suggested to target individual advisers with the around 400 emails that went out. This ties in with the number of FAP's likely not to have been sorted.

Those individuals targeted are likely not appreciating their structure.

The ones I have looked at directly who had said they were individuals when I checked on the FSPR have been an Authorised Body (AB) for their company record without a DRS defined. And they haven't been linked to the aggregator FAP or their AB. So the message to them was appropriate.

Also, individuals can be FAP's under the rules, not ideal, and not desirable, but possible. These individuals may be referring to themselves as FAs, but they are technically not allowed to as a FA and must use FAP.

It could be that these individuals are the ones that also got emailed. This also stands to reason the FA/FAP naming confusion would be there as they haven't updated their FSPR records.

Confused? Yes, most of the industry seems to be.

This raises the question if June 16 is the hard date we have been told where are the corresponding de-registration notices for the FAs that are not linked?

We have been told June 16 is a drop-dead date, so if you cannot link to a FAP after the 16th (FAs registered before March 15), we should have seen these notices as well, shouldn't we?

However, we also need to consider that FAs will change and move, and we don't want to be de-registering FAs every time they leave a FAP, so we will likely have a reasonable grace period when FAs leave and de-link from a FAP.

This is where the three-month (not 90 days) measure comes in, where there is a three month grace period to reconnect before the FSPR initiates their 20 working day notice for de-registration.

My guess is we have a bit of grace where lack of linking is likely to have a notice period. However, I'm not going to try it out or suggest you try it out either.

Another thing I have also noticed with mortgage advisers on the FSPR is there's a missing link between many advisers and their aggregator, which is a story for another day.

If your FA record on the DRS hasn't been linked to a FAP or AB and/or the FAP and AB, if you have one, hasn't linked their DRS, then you need to get a round-tuit! ASAP!

Tags: CPD FAP FSPR Jon-Paul Hale Opinion

« Slow to adapt and fixed in our ways - the problems with life coverEducating the educated - Code Standards 6, 7, 8 and 9 »

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Comments from our readers

On 27 May 2021 at 11:21 am JPHale said:
That last sentence is a bloody disaster! :D
On 27 May 2021 at 2:24 pm Murray Weatherston said:
Hi J-P
I hope the regulators are paying you well for your efforts as their explainer/interpreter-in-chief.
On 27 May 2021 at 2:42 pm All hat no cattle said:
You can link an FA to your FAP after June 16.
Just need to get a Full Licence first.

Caveat Emptor and good luck.
On 27 May 2021 at 5:02 pm JPHale said:
@Murray, I'm working through ticking the boxes keeping up, sharing it as I go as it's not nearly as simple as it could be.

And we need advisers out here if we expect to have an industry in the future that's not tied up like Aussie...

@AHNC, true. Though more the point, once the FA has re-registered proving they have the appropriate qualifications and understanding of the regulatory frame work they can then link to a FAP, TL or Full if it has gone through the full process...
On 28 May 2021 at 2:35 pm gavin austin adviser business compliance said:
More mis-information from regular comentators. all hat no cattle - you must be joking - "You can link an FA to your FAP after June 16.
Just need to get a Full Licence first". So not true - you couldn't actually do any links until your supposed date 16 March - you don't have to wait to get a full license before you can link. It would be great of people making comments like this would check there facts. Advisers are under enough stress etc without this sort of comment adding to it.
On 29 May 2021 at 9:53 am JPHale said:
@gavin austin adviser business compliance, ahh you miss read that... AHNC is well aware of the rules ;)

The point being made is if you miss June 16 linking your FA to your FAP you have to go through the reapplication process.

As in re-register the FA with full qualifications and then connect to a FAP, either full as they didn't have a TL or an existing TL FAP...
On 1 June 2021 at 9:33 am All hat no cattle said:
16/3 is the actual date linking started. Not the 15th of March - that is the date the legislation kicked in. The FSPR was updated overnight, and linking opened the next day. The actual date the linking grace period ends is three months after – now, I have checked my facts here, and I still think that would be 16 June.

I didn't say you had to get a FL before linking (prior to 16/6) - I said AFTER 16/6. While that is not technically true, in practice it may as well be, because the impact is the same.

Cos here’s the kicker: The major difference between TL and FL is the safe harbour around CKS. CKS lives at the FA level, not FAP. A new adviser registering, or a not-linked-by-16/3 FA who has been de-registered will need to meet the CKS requirements first. The three month grace period is solely to allow for FAs relying on the TL CKS exemption to get across.

If you are an FA waiting on a FAP to link you, and they don't get it done by 16/6, you will be de-registered and you need to re-apply to the FSPR. I wonder how many FAs out there were thinking their ‘group’ would do that for them, and miss out. Only about two thirds or so of advisers are linked to a FAP at the moment, and some of the remaining third may be affected in this way.

If you are both the FAP owner and the FA, and you don’t get your own linking done, then that’s too bad. You will have to re-apply to FSPR, and you may as well go for FL at the same time - L5 and all.

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