Financial advisers have until February 15 to register with regulator or cease offering advice

Nearly 1000 financial advisers currently must stop operating next week when the deadline to be on ASIC’s Financial Adviser Register arrives.

Almost 1000 financial advisers across Australia risk legal action if they continue to ply their trade with clients next week, when a deadline to comply with a new registry arrives.

The Australian Securities and Investments Commission said there were 757 eligible individual financial advisers, including timeshare advisers, who were not registered on the Financial Advisers Register.

Although this was down from 6000 on January 11, the unregistered cohort represented 4.9 per cent of all financial advisers.

Advisers not registered by the end of February 15 are required to cease providing personal advice, including all ongoing advice services, until they are not only registered but noted on the register.

The regulator said financial advisers who fail to register by the deadline and continued to conduct business would be in breach of a restricted civil penalty provision. The relevant provider’s authorising AFS licensee would also have committed an offence and contravened a civil penalty provision.

“Relevant providers and their AFS licensees should have robust processes in place to ensure that a relevant provider is registered prior to the provision of personal advice to retail clients in relation to relevant financial products,” ASIC said in a statement.

“AFS licensees should also ensure they understand the circumstances in which a relevant provider’s registration will cease.”

Financial Advice Association Australia chief executive Sarah Abood told The Australian that she was confident all advisers would be registered by the deadline, adding that requirement being passed by parliament caught many off guard.

“The timing of this was not ideal as legislation passed on November 27 and advisers had little time to prepare because Christmas and summer is the time many are on leave, so they only found out about this when they returned in the new year,” she said.

“Advisers have been asked to go through a lot of bureaucracy and paperwork with this and the complexity around the rules.

“There has also been some confusion from people who thought they were registered or that because they were on the financial adviser register they didn’t have to do anything, or were caught offguard that registration meant something entirely different.”

The requirement for financial advisers to be registered with ASIC was one of the recommendations from the Hayne royal commission conducted between 2017 and 2019 and is aimed at professionalising the financial advice sector. It brings the industry in line with requirements for legal and medical professionals.

The number of financial advisers in Australia have dropped since the royal commission from 26,500 in 2019 to 16,155 by March 2023, according to the corporate regulator.

Ms Abood said that the registration requirement had created much paperwork and red tape, and that the cost of such processes would not make financial advice more affordable.

“The issues is that unnecessary processes add a lot to the cost advice. While this on its own is not a massive thing, it is a lot of paperwork that adds to an already big pile of paperwork advisers have to do,” she said.

“What the government could do to get the cost of advice lower is look at what bureaucracy and paperwork there is and only keep or simplify it if it helps consumers.”

On 18 January, ASIC extended the deadline date by two weeks as it announced almost 6000 advisers were yet to register. The deadline has been extended four times from its initial deadline in order to allow the Treasury Laws Amendment (2023 Measures No. 1) Bill to pass parliament.

The regulator said that the current date was the final deadline and that it would not grant a further extension.

After the deadline has passed, ASIC will commence a program to check compliance and will take action when advisers are found to have provided advice when unregistered.