The Minister for Revenue and Financial Services, Kelly O’Dwyer, has revealed that there will be “no exceptions” from a proposed industry-wide financial planning exam, part of a comprehensive overhaul of the education, professional and ethical standards of financial planners.
In a radio interview last week, O’Dwyer said the proposed changes would be phased in, commencing from January 1, 2019.
“We say that all advisers coming in and those that are existing advisers are going to need to sit an exam and there will be no exception from this exam,” O’Dwyer said, according to a transcript of the interview released by her office.
O’Dwyer also confirmed that the nine-person board of the proposed standards body – which will set the exam, as well as determining new education standards and developing an industry-wide code of ethics – will consist of “three people from the industry, from bigger players; three people from smaller players; an ethicist; somebody who is an educational expert; and then someone who will be the chair of the particular body”.
O’Dwyer made no mention of consumer representatives sitting on the board, which had been provided for in early drafts of the professional standards legislation. O’Dwyer confirmed that the standards body will be independent and report to her as the responsible minister.
“I will make the appointments to this particular independent panel and then they will be responsible for setting the standards so I won’t interfere with that,” she said.
“That will be a decision made entirely by them. And obviously, the regulator, ASIC, will have the ability to oversight when things are going well and not going well, more broadly in the industry, as they currently do.”
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The importance of independence
O’Dwyer has previously announced that the standards body will, in its initial phase, be funded by the banks. However, O’Dwyer said it is “very important that it be an independent standards body, independent of the industry”.
“It needs to be set up by the Commonwealth, though, because while we’ve seen the accountants, and we’ve seen that lawyers over hundreds of years have been able to regulate their own industry and professionally develop, we simply don’t have the time right now to wait those hundreds of years for this to happen for financial advisers,” she said.
“So the government is intervening; we are setting up a Commonwealth company which will govern the professional standards for the financial advice industry.”
O’Dwyer confirmed that all financial planners will be required to “sign up to a code of ethics for the industry because so often we’ve heard so many stories about bad practices within the industry and we need to clean that up”.
“And we know that it’s very important that when people come in to a profession, that they have appropriate supervision before they’re let loose on the public; and we’ve seen that in the past with lawyers and accountants, where they’re properly supervised before they’re given the ability to provide direct advice,” she said.
“And finally, we’re going to require that they have an ongoing professional development component so that they are continuously learning and up-to-date with the very latest.”
