A financial literacy program aimed at financial planners and advisers is in its final stages of development and will be piloted by leading financial institutions before it is made more widely available.

The program was flagged in 2014 when AMP unveiled plans to establish a customer advice review panel and said it planned to work with the St James Ethics Centre to develop ethical training for financial planners. AMP will kick off ethics training by putting 500 of its financial planners though a pilot program.

“Some of the biggest institutions are funding the development of this,” says Dr Simon Longstaff (pictured), executive director of the St James Ethics Centre, which is putting the program together. The centre is also an independent adviser to the Banking and Finance Oath (BFO)

“There’s a demand all right. But demand is sometimes a fickle thing. You’ve got to make sure what you’re offering is good. And then we’ll pilot it. AMP is going to be the first one to do that – they’re going to put 500 of their people though just as part of the pilot, and then others are lining up with the same intention.”

Longstaff says the ethical literacy program’s “basic model is pretty much done”.

“There’s some refinement going on of the stimulus material,” he says,

“It possibly needs to be more finely tuned for the day-to-day life of financial advisers. It’s very hard to know though – there are some things you put in…that people say that would never happen, and others say it happens all the time. So it’s quite delicate doing that.”

Meshes with regulatory reforms

Longstaff says considerable effort has been made to make sure that the program meshes with regulatory reforms currently being considered.

“We are looking at how to make sure this model is properly integrated into all the other things that are going to be integrated into the ethics space around financial advice, whether it’s undergraduate degrees or professional years or postgraduate study to the masters level,” he says.

“We’ve got to make sure this ethical stream flows through the lot.”

Longstaff says both the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC) are monitoring development of the program

“It’s strongly supported by the Australian Banking Association and a number of others, and the whole development process has been overseen by APRA and ASIC, who are observing what’s done, mainly to make sure the public policy is well served so the industry is not driving it to a point where it’s no longer serving what the community ought to expect,” he says.

Longstaff says it remains to be seen how financial planners will come to undertake an ethical literacy program, as debate continues to swirl around the industry about whether ethics education should be made compulsory.

“People could come to it through connected dealer groups where one of the conditions of the licence might be that you need to do this; some will want to do it just to skill themselves up [or]; it may even be that the government mandates it,” Longstaff says.

“I don’t know the answer yet, I don’t think any of us do. It could be that in order to be on the [ASIC Financial Advisers’] Register you’ve got to do this; it could be that in order to operate without supervision you’ve got to do this. I just don’t know where the regulatory framework will fall.”

Avoid duplication

Longstaff says the program will also be structured to avoid duplication of the existing ethics frameworks and requirements of industry and professional associations.

“The AFA [Association of Financial Advisers] and FPA [Financial Planning Association] have their own codes, and their approach to the codes is really about a certain amount of familiarisation with the content and less to do with this broader capacity which you can bring to bear in the field [of ethics],” Longstaff says.

“That’s part of the international affiliations and obligations which shape how they do this.

“Our aim would be to try to make sure whatever we do covers as much as possible of what they have to do, so you’re not getting duplication.”

“Our approach has been to look at this as not so much an opportunity to correct an apparent deficiency as [an opprtunity] to equip people in important work to do something which is going to be done even better and add value to their experience, and to their clients.”

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