The Financial Planning Association of Australia (FPA) has rejected the Financial Services Council’s call for a new Advice and Competency Standards Board (ACSB) to oversee the Australian financial advice industry.
“We don’t see any need to reinvent the wheel. We already have professional standards and certification which is the highest in the world. Where do you want to go from there?” asks Mark Rantall, chief executive officer, FPA.
Under the plan outlined in its latest submission to the Financial Systems Inquiry, the FSC called for the ACSB as a tool to help rebuild consumer confidence in financial advice.While the FPA has dismissed the proposal, John Brogden, FSC chief executive officer, says the Association of Financial Advisers (AFA) has indicated it is open to the idea.
The FSC blueprint proposes the ACSB would combine the legislative and regulatory power of the Australian Securities and Investment Commission (ASIC), the Tax Agent Services Act and representatives from AFS licensees.
A core part of this is a training register, the details of which the FSC has deliberately left open-ended, with minimum competency standards to be decided by the ACSB.
“The public perception of advice is the lowest it has ever been,” says Brogden.
He repeatedly emphasises the need to “build back trust” in financial advice, during an address to gathered media at the FSC’s Sydney headquarters.
Answering questions about whether such a response is realistic in light of funding cuts to ASIC and the tight federal budget, Brogden revealed it would not be part of the budget, but self-funded by FSC members.
This also drew criticism from Rantall of the FPA. “We believe that product sales and professional personal advice need to be separated, and the independence of those standards is critical, which is provided by professional associations,” he says.
The membership list of the FSC comprises some of Australia’s largest vertically integrated financial institutions, including the ‘big four’ banks. Vertical integration is one of many areas being closely considered under the FSI.
“Professional standards of behaviour and practice are already embedded in [the FPA] professional code of conduct, as accepted by the Financial Ombudsman Service, so we believe that work’s already been created.
“We’ve got to get serious about education and professional standard setting. The FPA has led that call for many years and has put in place, both through the FPA, educational standards and competencies required for approved degrees and equivalents, and professional practice standards that are accepted by the independent Ombudsman,” Rantall adds.
“I think what we need to do is get behind that and make sure we have true separation between product sales and professional personal advice.”
The FPA’s position contrasts with that of BT Financial Group, which strongly supports self-regulation of the financial advice sector and is itself a member of the FSC.
“After our four years of public advocacy, today’s announcement by the Financial Services Council echoes our calls to both the Financial System Inquiry and Parliamentary Joint Committee to lift education, ethical and competency standards in the financial services industry,” says Mark Spiers, general manager – advice, BT Financial Group
“It is especially pleasing to see the industry supporting the call for an independent body to set education and professional standards,” he says.
Spiers argues that to be effective, the body needs to expand beyond the setting of formal education and competency standards and to have a “clear mandate to set and govern professional, ethical and education standards for financial advisers”.
“Membership of the body must also be compulsory and its standards binding. It is also critical that this body does not have lobbying powers other than those relating to higher education and competency standards,” he adds.
“We’ve always maintained the establishment of an independent body is a necessary and critical step towards the financial advice industry becoming a profession.”
