The Australian Securities and Investments Commission (ASIC) has given the thumbs-up to a 10-point plan produced by the Financial Planning Association of Australia (FPA), with ASIC commissioner and deputy chair Peter Kell labelling it “important” for industry bodies to be proactive in raising standards across the board.
“ASIC is very pleased to see the FPA taking the initiative on proposals to raise industry standards and promote professionalism,” Kell (pictured) says.
“This is a very important role for industry associations and we certainly support industry-led initiatives to improve the levels of professionalism and ultimately the outcomes for consumers.”
The 10-point plan was formally unveiled on May 22 following the FPA’s appearance at the Senate Economics Legislation Committee inquiry into the Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014. The day before that, FPA chair Matthew Rowe outlined the FPA’s plan along with the rational and the thinking behind the plan in an article written exclusively for Professional Planner.
Kell said some of the points in the plan “are ultimately matters for government policy”, but that ASIC was “carefully examining” the 10 points and “there are certainly some that ASIC can look at and support”.
“The FPA’s support for a full adviser register lends further weight to an issue that ASIC has raised to ensure that we have a comprehensive and publicly available list of all the practitioners in the financial planning space,” Kell says.
“We would emphasise that that’ll not only help the regulator but, importantly, it will help the industry itself and we believe ultimately consumers to get a better understanding of who is working as a financial planner, where they are, and what they offer.
“At the moment we simply do not have a full picture, which does not help when we try and keep track of bad apples.”
Kell says ASIC also supports industry-led moves to raise minimum competency standards across the board.
“We’re also pleased to see the FPA focusing on competency standards for planners, and we remain committed to talking to the broad industry about how that issue can best be taken forward,” he says.
The 10 point plan
The FPA seeks to raise the standards of financial advice in Australia for the benefit of both consumers and the profession. Our 10-Point Plan includes:
1. Raising the minimum criteria so that the term financial planner/adviser is restricted under the Corporations Act and the individual must:
a. have membership of an ASIC approved professional body; and
b. hold minimum education standards of a relevant university degree, and three years’ experience over a five-year period; and
c. maintain minimum continuing professional development of 90 CPD points over a triennium.
2. Amending the law to develop criteria so that ASIC can approve professional bodies such as those prescribed in the Tax Agent Services Act or the approach proposed by the FSA in the UK.
3. Immediately establishing a financial planner education working group (FPEWG) to develop a considered, strategic and holistic financial planner education framework. With the aim of lifting minimum education and experience standards to a relevant university degree and three years’ experience over a five-year period.
4. Defining the term “commission” and then banning commission under the General Advice exemption.
5. Re-terming general advice as “general or product information” and limiting it to the provision of “factual information and/or explanations” relating to financial products.
6. Developing and implemeting a co-regulatory design, which recognises and facilitates the role of “approved” professional bodies in assisting ASIC to achieve its consumer protection and confidence mandates.
7. Establishing a public register which is managed by ASIC, with a requirement for all financial planners/advisers (including employed representatives) who provide personal advice to be individually registered.
8. ASIC being granted suspension powers for financial planners/advisers suspected of material and systemic breaches of the best interest duty. ASIC must have a justifiable position and the financial planner/adviser has the right of appeal to AAT.
9. Once the Federal Budget position has been improved, that the government commence consultation with industry to determine the benefit to have the preparation of an initial financial plan be expressly stated to be tax deductible.
10. A review into lifting the criteria of a sophisticated investor.
Source: Financial Planning Association of Australia
