According to the Stockbrokers and Financial Advisers Association, the draft protocol for adviser reference-checking puts advisers looking for new employment in a very vulnerable position.
While the association said it supported the Government's attempts to "prevent the spread of bad apples in the industry," there are far better reference-checking models available than one which requires a prospective employer to contact the adviser's current employer for compliance details.
SAFAA CEO Judith Fox said this wasn't fair, as it was tantamount to letting employers know that "the adviser is seeking a job elsewhere."
Fox continued: "A central source for enquiries rather than a model that directs enquiries to the adviser’s current employer is a much more efficient and fair system of compulsory reference checking. In what other profession are you required to effectively tell your employer that you are looking for another job?"
Instead of what is currently proposed, the SAFAA recommended looking to the US model where there's a central register of information about the compliance records of individual advisers, which can be checked by prospective employers and the public.
"Any system that ASIC develops must allow for the timely and efficient flow of information," Fox added. "The model currently proposed by ASIC is unwieldy and time-consuming, while a central register could deliver information to recruiting licensees in a matter of minutes.
"It has the added bonus of being searchable by the public, bringing transparency into the system."
The SAFAA's criticisms of ASIC follow the regulator announcing its new affordable advice project, which is aimed at consulting the industry as to how ASIC can better collaborate on making the delivery of scaled and limited advice. ASIC noted that the number of advisers on the Financial Advisers Register has dropped 14.6% below the long-term average as at 5 November 2020, saying this was creating widespread concern about the availability of advice in circumstances where people may need it most.
Indeed, the need for financial advice post-COVID has become increasingly apparent, as evidenced by some of the stories in the latest season of Secrets of the Money Masters. The first episode of the second part, featuring married couple Kate and Greg, premieres today here.
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