Fintech licensing exemption creates inequality
The Financial Planning Association has disputed the need to provide licensing exemptions to financial services technology start-ups for six months, arguing the problem is within the licensing regime itself.
Speaking at the FPA Sydney member roadshow, chief executive, Dante De Gori, said the Australian Securities and Investments Commission's (ASIC's) move to canvass a regulatory sandbox approach for fintech start-ups created an uneven playing field, and argued everyone in the financial advice industry should benefit from any changes to licensing regimes.
"I'm not here advocating that exemptions should be applied to fintechs. We don't accept providing exemptions to the licensing regime purely because you're a fintech," de Gori said.
He added the FPA was concerned that exemptions to the licensing regime would reduce the integrity of the regime and remove some of the consumer protections.
"The licensing regime is designed to do a couple of things: number one is to ensure that the right people are starting up businesses and running businesses that are appropriate, secondly to protect consumers," de Gori said.
"In our view, if the licensing regime doesn't accommodate innovation or doesn't accommodate the ability for start-ups to enter, then there's a problem with the licensing regime. We feel that that should be concentrated on rather than providing exemptions."
Innovation was not simply the domain of fintechs, as there were many people who wanted to establish innovative financial services business but were constrained due to the current licensing regime, de Gori said.
"Either the licensing regime is robust enough to cater for everybody that wants to be in it or it's not. And if it's not then fix the licensing regime.
"If it is a barrier to fintechs, it's not just a barrier to fintechs, it's a barrier, full stop," de Gori said.
AUTHOR
Malavika Santhebennur
Recommended for you
ASIC’s enforcement action is having an active start to the new financial year, banning a former Queensland financial adviser for 10 years in relation to fees for no service conduct.
ASIC has confirmed the industry funding levy for the 2024–25 financial year, and how much licensees can expect to pay.
Australian licensees are expected to make greater use of custom model portfolios for their clients, according to State Street Investment Management, following in the footsteps of US peers.
Adviser Ratings has argued that it’s time for more advisers to utilise digital engagement tools available to them as a disconnect grows between consumers seeking advice from finfluencers and from professionals.
