Countdown is on for financial adviser register – verification is the key

Sydney, Australia: Monday, 2 February 2015 – With only weeks left to comply with ASIC’s new financial adviser register the countdown is on for financial institutions and non-aligned financial advice licensees to register and properly vet those they put on the register, as the stakes are high.

The register aims to increase transparency for consumers, enhance consumer confidence through identifying those with appropriate qualifications and backgrounds, and subsequently increase take-up of financial advice. ASIC has the power to impose hefty fines and pursue possible jail time against any individuals or businesses who fail to join the register or add misleading information.

The national register of financial advisers is a big change for the industry, placing the onus of responsibility on businesses for the accuracy of the information supplied on qualifications, experience and authorisation of their employed and authorised representative advisers.

Mark Hoven, Head of Wealth at Veda said: “We think verification at source is the most reliable form of quality assurance. While this poses challenges it also offers the financial advice industry a significant opportunity to refine its processes and strengthen its reputation.

According to Hoven, employers have been willing to go to source for bankruptcy or police checks and should adopt the same disciplined approach when checking something as important as professional qualifications or previous employment. The fact this is not being done consistently is concerning, particularly given the potential fallout and reputational damage arising from false representation by advisers, or from businesses relying on previously collected documentation which lacks veracity.

“Consumers will feel empowered by being able to check the credentials of the person giving them wealth management advice. Financial advice businesses need to be ready for this scrutiny,” Mr Hoven said.

Many businesses were hoping for a 12-month leeway in response to the short timeframe of compliance since the legislation was first announced in October 2014, yet the government has stood firm on its 31 March 2015 deadline. Businesses now have less than four weeks to put new processes in place, or update existing ones, to meet their obligations to provide key employment background data.  Requirements for education and qualification information have an extended timeframe of 31 May 2015.

Hoven says the key to the success of the new regime is robust and reliable verification of advisers’ qualifications and background.

 “Verification at the source is important to make this work; the consumer needs confidence that the adviser is who they say they are and that this is independently verified. Any shortcomings will reflect badly on the entire register.

“We know through our years of experience in verification services, and more recently helping financial advice businesses prepare for the register, what works and the pitfalls to avoid,” Mr Hoven said.

An additional challenge for businesses to be compliant is the complex licence and ownership structure of the financial advice industry, coupled with Australia’s privacy laws, which require multiple consents from advisers to verify their backgrounds across all designated areas.

“Some organisations have significantly underestimated what’s required to meet the immediate deadline and their ongoing obligations to ensure adviser information remains up to date,” Mr Hoven said.

The leading provider of credit information and analysis in Australia and New Zealand, Veda recently expanded its wealth business which serves the superannuation, financial advice and asset management sectors. As part of its strategic focus on wealth, Veda has established a customised offering to meet the specialised needs of the new financial advice register.

 -ENDS-

Background Information

The ASIC financial adviser register will contain details of all persons employed or certified, directly or indirectly, by Australian financial services licensees who are authorised to provide personal financial advice to retail clients on Tier 1 (complex) investment products.

While the register will be available to consumers from 31 March 2015, details of adviser qualifications, training courses and professional body memberships will not be available until the end of May. This extension has been granted to give financial services licensees time to gather and verify the information before adding it to the register. Consumers will also be encouraged to report advisers who are unlisted or have provided false information.

Veda’s market leading suite of verification services, including Employment Verification and ID Matrix, provide a simple and secure alternative to manual verification and can aid businesses in updating their hiring and employee background monitoring processes.