ACLs to prove a liability

by Ben Abbott01 Nov 2011

ACLs could be seen as a liability for buyers of broker businesses in future, and as a result are unlikely to add any value to a business, according to an industry expert.

Speaking at PLAN Australia's national conference last week in Darwin, Comparator Business Benchmarking managing partner Sarah Brennan said in financial planning, licences were often not desired by business buyers.

"In financial planning which has had licensing for a little bit longer, what we have seen is that acquisitions have been for businesses - not a licence," she said.

"Normally the acquirer does not want to buy a licence, and they will actually carve one out of the purchase if there is one - because bying a licence buys liability, buying a business is much better."

Brennan said the value inherent in an ACL had been a misconception during licensing among broking businesses.

Brennan added that she expected an ongoing shift towards credit representative status among brokers over time, despite the mortgage industry being "smarter" about this reality initially than financial planners.

"In the financial planning community a lot of people actually went down the licence path to start with, and then realised the cost and compliance involved in running a licence, and we saw a move back to a credit rep status."

Brennan said in the mortgage industry there was a number of misconceptions in addition to ACL value.

"I think there was a misconception was that getting a licence was easy. I think that's been dispelled for the majority through the licensing process," Brennan said.

"I think there was also not a clear understanding about the liability of having a licence, and I think in the end that becomes quite clear," she said.

Related stories:

Round 2, as ASIC launches surveillance

Many brokers pushed into ACLs: ALCo


  • by WhistleBlower 1/11/2011 11:21:32 AM

    .... and, this is just another story that confirms the whole industry is a farce. The ASIC/Government drive to "Licence" was ostensibly a drive to empower the mighty ASIC. What this process was really designed to do was decrease the smaller players by placing more barriers and pressure points that (over time and through analysis) would lead any right thinking person to exit the (so called) industry.

    This was all driven by banking lobby groups in Canberra... anyone who remotely understands the word 'strategy' should have figured this out 2 years ago.

    It's just Freakanomics folks, cause and affect.... banks lobby, develop political debate, then voila a policy push, new legilslation and an industry in its early-stage development is taken over by faceless folk in Canberra and their finger prints aren't even left on the outcome - now that's clever.

    In fact, I'm might just start a push for an Australia Card, a National Identi card and serial number that can be attached to every transaction people are involved in, and for those in the mortgage game, you'll need to place your National Identity number on each loan submission, document..... and then on your home letter box.

    Now that's beautiful.

  • by SteveMc 1/11/2011 12:59:21 PM

    Really? We are awash with experts at the moment ready to capitalise on any perceived uncertainty from change - for a fee. Meanwhile, back at the ranch, good people do great work doing what thy do best. To those that have taken on the initiative on an ACL, go you good thing. The real experts are actually writing loans & building our broking business. The ones that can't, love to tell us how to do it.

  • by Tony 2/11/2011 5:57:08 PM

    She is kidding. A credit licence and Financial planning licence cannot be compared.