An increasingly urgent issue facing financial planners is clarity on just what educational standards they’re going to be required to meet, and by when. There’s no sign of a quick resolution.
There’s little resistance left within the industry to the concept of setting appropriate educational standards for all new entrants to the profession and insisting that existing participants upskill where necessary. It is the timeframe for the changes, and uncertainty surrounding just what the changes will be, that is causing disquiet and anxiety, and understandably so.
There will be no resolution before a so-called standards body has been established by law, funded and staffed, and fully functioning. This body is absolutely pivotal to resolving all of these issues.
But the standards body currently exists only in draft legislation. And even after the body has been established, it will have a mountain of work to do before any education standards can be finalised. For the foreseeable future, financial planners remain in limbo.
Even after the legislation passes both houses, the relevant minister – Assistant Treasurer Kelly O’Dwyer – must then appoint a chair to the body, and then the chair must appoint the first director. Then those two will appoint a third member, and so on, until seven seats are filled.
We know that in addition to a chair there must be three financial services industry representatives, two consumer affairs experts and an ethicist.
The importance of who the minister appoints as chair cannot be understated. It simply must be an individual with the experience, standing and gravitas to pull together the whole standards body, and to ensure that all subsequent appointments are both credible and workable.
Not a deep pool
There is frankly not a deep pool of individuals from which this person could be drawn. They require a rare combination of characteristics.
In addition to the qualifications and characteristics of the chair, consumer representatives and ethicist, the draft legislation provides that the three financial services industry representatives must have “experience in operating a financial services business or providing a financial service”.
No directors of the standards body can concurrently be executives of industry or consumer associations, although they can be members of such entities.
Even if all of that can be done expeditiously and people of sufficient calibre can be found to fill the seats, only then can the work actually start. Among other things, the standards body must determine:
- The requirements for a degree or degree-equivalent qualification for entry to the profession
- The requirements for the professional year
- Continuing professional development requirements
- The structure and content of the basic competence exam
- Bridging course requirements for existing advisers.
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One bright spot
One bright spot in this issue is that, contrary to conventional wisdom, existing financial planners will not necessarily be required to attain a university degree. There will be no mandatory full-time or even part-time return to university, necessarily – and advisers who have made decisions based on this assumption may want to think again.
The draft legislation and explanatory memorandum say only that existing advisers must complete “an appropriate bridging course or courses, to raise their qualifications to a bachelor degree level, or equivalent qualification, [emphasis added] approved by the body”.
It just says “bachelor degree level”, which strictly speaking means AQF 7. It does not necessarily mean an actual degree. The Australian Qualifications Framework (AQF) sets out the expected knowledge, skills and ability to apply knowledge and skills for each level, but doesn’t explicitly say you have to get a degree to satisfy those criteria. It just so happens that if you get a degree you will meet the requirements of AQF 7.
Uncertainty and misinformation around this aspect of the proposed education reforms is only one example of what’s causing stress for many financial planners. What this standards body eventually does is absolutely critical. The government simply cannot move quickly enough – but must hasten slowly to ensure it retains maximum credibility – to get it up and running.
