A new year brings new regulation with the making of the awkwardly titled and surprisingly complex Corporations Amendment (Register of Relevant Providers) Regulation 2015 (Regulation) which was registered on 16 February 2015.
The Regulation follows the recommendations of the Senate Economic References Committee Report into the performance of ASIC (released in June 2014), accepted by the Government in July 2014 with details announced in October 2014 and endorsed by the Financial System Inquiry Final Report (released in December 2014).
Importantly, the register, which ASIC has indicated will be accessible from 31 March 2015, will contain details of all 'relevant providers'. This term has been used to refer to individual advisers (employees, authorised representatives and individual licensees) authorised to provide personal financial advice to retail clients on financial products other than:
- basic banking products;
- general insurance products;
- consumer credit insurance products; or
- a combination of any of those products.
The Regulation also imposes a number of obligations necessary for the collection of information, which will begin to apply from 9 March 2015. Licensees must choose a start date between 1 January and 31 March 2015 for the currency of the initial information to be notified to ASIC and this information must be lodged by 30 March 2015for all retail advisers of the licensee. Any changes to this information must be notified to ASIC by:
15 June 2015 (in NSW – 30 business days after 1 May in other states and territories) for important changes (licensee details and authorised products) before 30 April 2015;
- 13 November 2015 (in NSW – 30 business days after 1 October in other states and territories) for other changes before 30 September 2015; and
- within 30 business days for later changes.
Licensees must notify ASIC of educational qualifications and professional memberships of advisers by 30 May 2015.
A person who starts or ceases to control a body corporate licensee must also notify ASIC of certain details (unless cessation of control occurs within 30 business days of starting of control) within 30 business days (subject to similar transition periods to those above).
The information required to be notified and included in the register is a long list which includes:
- the adviser's name, registration number, status and experience;
- the adviser's qualifications and professional association memberships;
- the adviser's licensee and authorised representative (but this only seems to apply where the adviser is appointed by the authorised representative on behalf of the licensee and does not apply where the licensee directly appoints individual advisers);
- the adviser's 'recent advising history' – the history of licensees who the adviser has acted for in providing retail advice over the past 5 years;
- the products the adviser is authorised to advise on and whether the adviser is authorised to provide 'class of product advice' – it is not clear whether this requires named products where authorisations are limited in that way;
- any bans, disqualifications or enforceable undertakings – this is in the register but not required to be notified; and
- each person who controls the adviser's licensee (if applicable).
ASIC has the power to include other information in the register as well. However, there is a privacy protection to prevent adviser date and place of birth being included on the register.
Unlike FOFA, the obligation to provide the relevant information to ASIC is an offence with a maximum penalty of 250 penalty units ($27,500) for a body corporate. Advisers are also required to provide the information required to enable a licensee to comply with its obligations but only if asked by the licensee. Although a penalty is not specified, it appears that advisers breaching this obligation would commit an offence with a maximum penalty of 5 penalty units ($550) per breach.
The introduction of the register will certainly increase compliance costs. It is to be hoped that increased transparency of adviser information will also increase consumer trust and confidence in financial planners.