Banks urge tougher conditions for planning licensees
The Australian Bankers' Association (ABA) has urged much more onerous requirements for financial planning licensees.
In a submission to the Senate Economic Committee inquiry into consumer protection in the banking, insurance and financial sector, the ABA has argued that the Australian Securities and Investments Commission (ASIC) should consider whether the capital requirements imposed on advice licensees remain sufficient.
The submission has been lodged amid recent comments that the sheer scale of large institutions such as banks and insurers place them at an advantage to smaller licensees where client compensation is concerned.
The ABA submission argued that ASIC should require an annual assurance statement from all Australian financial services (AFS) licensees that they meet their licence obligations, including compliance with ASIC’s Regulatory Guide 126: Compensation and insurance arrangements for AFS licensees [RG126].
“ASIC should review the compensation requirements under RG126 to ensure they remain fit-for-purpose,” it said. “ASIC should also review the financial requirements for financial advice licensees under Regulatory Guide 166: Licensing: Financial requirements [RG 166], to consider whether capital requirements for AFSLs with a financial advice authorisation remain sufficient.”
“Sufficient resources to compensate clients and meet any insurance deductible payments should form part of the resources required for an orderly wind-down of a financial advisory business,” the ABA submission said.
It said the past conduct of a person as a manager of a financial services business, including whether that business had unpaid external dispute resolution (EDR) determinations, should be part of ASIC’s AFS licensing and credit licensing assessment.
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