Our Response to the 2025 FSC Green Paper
The Financial Services Council’s recent Green Paper, The Value and Future of Advice Licensing, is a timely and constructive contribution to an essential debate: how to make financial advice more accessible, affordable and accountable.
We agree with the Paper’s premise that the current licensing regime, while well-intentioned, is due for re-examination. And we support its call for greater proportionality, flexibility, and a clearer path to professionalism in advice.
But in our view, the Paper’s framing introduces some imprecision—and with it, the risk that policy solutions may be built on unstable foundations. If reform is to be successful, it must be grounded not only in adviser sentiment, but in law, evidence and clear lines of accountability.
Read the FSC Green Paper
A Better Lens for Understanding Licensees
The Paper draws a distinction between “licensed” and “self-licensed” practices, suggesting that advisers operating under their own Australian Financial Services Licence (AFSL) face unique compliance burdens that could justify a new, tiered regime.
But the distinction between “licensed” and “self-licensed” advisers doesn’t exist in law.
All advisers are licensed—either directly or as representatives of a licensee. What matters is not the label, but the locus of control.
We proposed an alternative lens: the distinction between Principal Licensees and Agent Licensees.
- In a Principal model, the advisers themselves influence or control governance and are embedded in the decision-making of the business.
- In an Agent model, advisers provide services under a licence held by an unrelated entity, with centralised oversight but less day-to-day involvement in operations.
This distinction helps explain why some smaller licensees may have stronger oversight, clearer accountability, and fewer conflicts than larger, more complex structures. It also avoids conflating “size” with “risk.”
Read our Response
Scale Doesn’t Guarantee Oversight
The Green Paper suggests that large licensees provide superior compliance support and that this model may offer economies of scale.
In some cases, this may be true. But it is not universally so.
Past inquiries, most notably the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and ASIC’s surveillance reports (REP 515, REP 562) have shown that compliance failings were often most acute in large, well-resourced licensees. Internal compliance functions were sometimes compromised by commercial pressures or conflicts of interest.
By contrast, some self-licensed practices achieve stronger oversight by outsourcing compliance to independent providers, allowing for a degree of objectivity and challenge that internal teams may lack.
The key point is not that one model is better than the other—it’s that compliance effectiveness depends on governance, culture and accountability, not size alone.
Accountability Under the Law
Another theme in the Paper is that licensees may be unfairly burdened by responsibility for adviser misconduct, even when the adviser is “at fault.”
But this isn’t a flaw in the law, it’s a design feature.
Under the Corporations Act, licensees are responsible for the conduct of their representatives because they hold the licence, determine the systems, and benefit commercially from the advice. ASIC’s guidance, and recent enforcement actions (e.g. ASIC v RI Advice, Dixon Advisory), reinforce this principle.
Importantly, licensees are not held liable simply because something went wrong. They are liable when they fail to take reasonable steps to supervise and ensure compliance.
This legal structure provides important protections for consumers. Any reform that alters it must tread carefully to avoid unintentionally reducing accountability in the name of flexibility.
Read our Response
Toward Constructive Reform
We support several of the Paper’s aspirations—including improving transparency, supporting professionalisation, and lifting governance standards.
But to achieve those goals, we believe reform efforts should prioritise:
- A clearer conceptual framework for licensee models that better aligns with legal and operational reality (e.g. Agent vs Principal);
- Strengthening individual accountability, for example through a public register of Responsible Managers; and
- Improving the quality and independence of compliance oversight, whether internal or external.
Robust, scalable licensing must be designed to reward good governance and cultural maturity—not simply to reflect revenue size or headcount.
Final Thoughts
The FSC Green Paper opens the door to a vital conversation about the future of financial advice licensing. We agree that the current system has limitations—but also believe that careful calibration, rather than structural overhaul, is the better path forward.
By refining the language we use, grounding reform in legal principles, and focusing on accountability rather than assumptions, we can support a licensing framework that protects consumers, supports advisers, and reflects the true diversity of models in today’s advice market.
Read our Response
Frequently Asked Questions
1. What is the key flaw in the FSC’s distinction between “licensed” and “self-licensed” advisers?
The distinction lacks legal basis—all advisers are licensed under the Corporations Act, either directly or via a licensee. The real difference lies in governance control, which the paper overlooks.
2. Why might small licensees offer better compliance outcomes than large ones?
Smaller licensees often have tighter governance and outsource compliance to independent experts, fostering more objective oversight than internal teams within larger, more complex structures.
3. Isn’t it unfair for licensees to be responsible for adviser misconduct?
No. Under the law, licensees are accountable because they control the systems, approve representatives, and profit from their services. Responsibility flows from control—not from fault alone.
4. How does the Agent vs Principal model improve our understanding of licensees?
It clarifies whether advisers influence governance (Principal) or operate under external control (Agent), allowing for more accurate assessments of accountability and oversight quality.
5. What reforms does Assured Support recommend for licensing?
We propose a clearer legal framework, stronger individual accountability (e.g. public RM register), and better compliance independence—focusing reform on culture and governance, not licensee size.
