Registered financial advisers with little working knowledge of the code of conduct for professional advisers will need strong systems to navigate the new regulatory system, one compliance expert says.

Gavin Austin, of ABC Compliance, said he was working through the process of determining whether his firm could operate as a financial advice provider under the new rules.

All advisers will be required to work under a licensed financial advice provider, either as financial advisers or nominated representatives.

Austin said small firms would need help, especially if they did not want to join forces with a large dealer group.

Doing it themselves would be onerous, he said, with ongoing compliance requirements.

The Australian experience indicated that such firms could expect to have to set aside as much as a day a week to keep on top of it.

Groups such as Share and Kepa have already indicated that they will offer a provider model to their members who do not want to run their own FAPs.

“We thought we could offer all the compliance behind the requirements of the licence and they could come under our wing but continue to operate mostly in the way they were used to doing.”

When financial advice regulation was first introduced, some advisers tried to join with a QFE to help with compliance but found the restraints on their business too much, and left to return to independence.

“We don’t want to go down that path, we want to provide them with an option where they can still have their independence and retain their own branding, with back-up where needed.”

Austin has a business partner and is looking to contract two other compliance experts, particularly with a focus on risk advice.

There would need to be some controls on how advice was delivered, he said, because of the responsibility the financial advice provider would bear for its financial advisers.

Risk advisers were the most in need of help, he said, because they had not been subject to the code that already binds AFAs and would not have the familiarity with it to start from.

He expected much of the obligations in that code to carry through – those who had been RFAs would need to be able to satisfy the FMA that they were following the rules. 

“Many will need to contract that out.” Austin said he would firm up plans over the coming months.