Legitimacy of the current Australian Financial Services licensee-authorised representative licensing model: theory and Australian empirical evidence

McInnes, A 2018, Legitimacy of the current Australian Financial Services licensee-authorised representative licensing model: theory and Australian empirical evidence, Doctor of Philosophy (PhD), Accounting, RMIT University.


Document type: Thesis
Collection: Theses

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Title Legitimacy of the current Australian Financial Services licensee-authorised representative licensing model: theory and Australian empirical evidence
Author(s) McInnes, A
Year 2018
Abstract Licensing financial advisers through third-party, often commercially-driven product-conflicted, institutional licensees threatens independence and raises conflicts of interest. Unsubstantiated claims in the media and practice grounds this sensitive and controversial matter. Academic financial planning researchers neglected examining the legitimacy of the current adviser licensing model, because deficiencies in financial planning theory to define, model and measure legitimacy exists. Therefore, a PhD scholar developed a conceptualised theoretical framework to examine the legitimacy [or what was found to be the illegitimacy] of the licensee-authorised representative licensing model. To develop this framework, the student applied to the financial services discipline, in an integrated perspective, agency, legislative, legitimacy theories and theories of professions. Data collection of a probability random sample of ASIC registered authorised representatives occurred utilising a survey. Through structural equation modelling, empirical evidence revealed advisers are dual agents facing conflict of interest from association to product-conflicted licensees. The research highlighted, this conflict is inconsistent with four objectives of the Australian Commonwealth Corporations Act 2001. Applying Suchman’s theoretical legitimacy model to licensee-adviser licensing, examined illegitimacy further. Survey respondents pointed out the top three key drivers leading to illegitimacy tendencies, specifically: 1) unintentional [and intentional] breaches of the statutory best interest duty, 2) practices resulting in misaligning adviser-client’s interests, and 3) licensees’ commercial interests compromising the best interest duty. With some reservations, survey respondents strengthened arguments for individual licensing by making known preference for licensing via a single independent professional body, like other professionals. However, advisers feared losing the subsidised support services licensees offered them. These concerns need further clarification and investigation in future research. On the grounds of this study’s findings all financial planning stakeholders should work together towards individual licensing, like other professions. As part of policy recommendations, the legislated Financial Adviser Standards and Ethics Authority (FASEA) tasked with professional standards, education and ethics could evolve to also appoint, register, regulate, discipline and cease individual advisers from practicing their craft as true professionals. This will not only further professionalise financial planning and encourage new graduate entrants, but also improve public trust and confidence in financial advisers.
Degree Doctor of Philosophy (PhD)
Institution RMIT University
School, Department or Centre Accounting
Subjects Financial Institutions (incl. Banking)
Corporations and Associations Law
Financial Econometrics
Keyword(s) Commonwealth Corporations Act 2001
Licensing
Financial advisers
Legitimacy
Agency
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Created: Tue, 11 Sep 2018, 15:51:04 EST by Adam Rivett
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