FAAA Advocates Balance in Non-Compete Reform for the Financial Sector

The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.

The FAAA highlights that while non-compete clauses are often deemed unenforceable under existing common law, there is a necessity for legislative backing to restrict the establishment of intimidating or ambiguous clauses in employment contracts. This viewpoint was outlined in their submission to Treasury's review on 'Reform to non-compete clauses and other restraints on workers', emphasising the need to uphold efficient labour market operations.

However, the FAAA also points out the importance of preserving business interests, including safeguarding confidential information, maintaining client relationships, and ensuring workforce stability. Two specific concerns arise within the financial advice sector. Firstly, protections for investments into training professional year (PY) candidates. Secondly, the incorporation of reasonable non-solicitation clauses that reflect the inherent value of financial advice client relationships.

The association argues for the enforcement of non-solicitation clauses for up to 12 months after an adviser departs a firm, ensuring businesses have sufficient time to transfer client relationships to new advisers. Such measures are crucial, the FAAA believes, to maintaining the firm's stability and value, asserting that these clauses should only restrict active solicitation rather than inhibit clients from leaving by choice.

This debate over client ownership and the commodification of client relationships has persisted within the industry. Nonetheless, the FAAA posits that preserving client non-solicitation clauses is vital for safeguarding the financial stability of advisory businesses. They assert that when an adviser opts to start their own firm or acquire a client's book, it is imperative that these transactions occur with contractual assurances against client solicitation.

The FAAA also addresses the dilemma of investing in PY advisers. Given their susceptibility to being targeted by competitors post-training, they suggest the implementation of non-compete clauses valid for up to two years post-PY completion. Such clauses, they argue, are justified, as they grant employers the confidence to invest in new talent without the impending threat of them being enticed away.

Ultimately, the FAAA stresses the necessity of a balanced approach in non-compete reform. They maintain that while protecting employees' mobility is crucial, safeguarding businesses’ investments and preserving the value of financial advice enterprises are equally compelling priorities.

Published:Wednesday, 10th Sep 2025
Author: Paige Estritori

Please Note: We do not endorse any specific products or companies. Some content is sourced from third parties, including press releases, and may not be independently verified for accuracy or completeness.

Share this news item:

Finance News

Clear

Non-Bank Lenders Escalate Court Actions as Major Banks Withdraw

07 Apr 2026: Paige Estritori

In recent years, Australia's financial sector has witnessed a notable shift in lending and enforcement practices. Non-bank lenders have significantly increased their court enforcement actions, while major banks have concurrently reduced their involvement in such proceedings. This trend underscores a changing dynamic in creditor behaviour and raises important considerations for small and medium-sized enterprises (SMEs) seeking financing. - read more

APRA Chairman Warns of Australia's Exposure to Global Financial Shocks

07 Apr 2026: Paige Estritori

In a recent address at the 2026 AFR Banking Summit, Australian Prudential Regulation Authority (APRA) Chairman John Lonsdale highlighted the nation's susceptibility to global financial shocks. His remarks underscore the need for heightened vigilance within Australia's financial system. - read more

Digital Transformation Revolutionises Australia's Mortgage Industry

07 Apr 2026: Paige Estritori

The Australian mortgage industry is experiencing a profound transformation driven by technological advancements. As customer expectations shift towards instant, digital-first experiences, lenders are compelled to adapt to remain competitive. - read more

Renown Lending Boosts SME Funding Pool to $400 Million

30 Mar 2026: Paige Estritori

In a significant move to support small and medium-sized enterprises (SMEs) across Australia, Renown Lending has expanded its funding pool from $250 million to $400 million. This increase aims to provide fast and flexible financing solutions to businesses nationwide, addressing the growing demand for accessible funding options. - read more

NAB Continues to Lead Australia's Expanding Business Lending Market

30 Mar 2026: Paige Estritori

Australia's business lending landscape has reached a significant milestone, with authorized deposit-taking institutions (ADIs) reporting a combined total of $1.2 trillion in loans to non-financial businesses as of January 2026. This marks a 9.3% increase over the previous year and a substantial 53.9% growth since January 2020. - read more

RBA Reports Surge in Non-Bank Business Lending

30 Mar 2026: Paige Estritori

The Reserve Bank of Australia (RBA) has observed a notable increase in business credit, particularly from non-bank lenders, in its February 2026 Bulletin. This growth is attributed to heightened competition among established lenders and the expansion of specialist non-bank and private credit lenders. - read more

Liberty Financial's Expansion in SME and SMSF Lending Markets

22 Mar 2026: Paige Estritori

Liberty Financial Group has reported significant growth in its lending to small and medium-sized enterprises (SMEs) and self-managed super funds (SMSFs) in its half-year results ending December 31, 2025. The company's net profits after tax rose to $76.4 million, up from $67.7 million in the previous six months, driven by increased lending in these sectors. - read more

Click for more Finance News