Cabinet approved the nine appointees to the new Financial Advisers Standards and Ethics Authority (FASEA) before the Minister for Revenue and Financial Services, Kelly O’Dwyer, announced them yesterday.
O’Dwyer says that while it “was not, strictly speaking, a Cabinet question”, she sought approval to give greater weight to the authority, which she says the government wants to be “a game-changer when it comes to standards for financial advisers”.
The minister says it will be a matter for the new board to appoint the chief executive, and that the first board meeting will be held on a date yet to be set.
“I think the first thing they are going to need to do is set the strategic objectives for the authority,” she says.
O’Dwyer says the board has a long list of diverse tasks to work through; from setting an industry-wide exam, to developing new minimum degree-level entry requirements and an industry-wide code of ethics.
The minister had to negotiate the oceans of vested interests and conflicts that exist within financial planning to unveil a line-up likely to gain wide support from the industry as it moves closer to attaining the status of a profession.
The legislation establishing FASEA required that the board, in addition to its chair, also consist of three directors with financial services experience, three directors with consumer advocacy experience, an ethicist and an academic.
An exhaustive search process
Yesterday’s announcement caps what O’Dwyer says was an exhaustive and inclusive process. It is understood that more than 300 names were put forward to be considered for the directorships with financial services experience alone.
“We ended up going out and engaging in a very broad stakeholder consultation,” O’Dwyer says. “It was a very inclusive process. I wrote to all the stakeholder bodies asking for their nominations. Treasury provided recommendations to me in relation to the appointments. I made a decision and it went to Cabinet, even though it’s not, strictly speaking, a Cabinet question.”
O’Dwyer has given FASEA the best chance of succeeding from day one. Certainly, it is starting out on the best footing it could, with a high-quality board that has a strong mix of experience and expertise, starting with its chair, Catherine Walter. O’Dwyer says Walter was a stand-out candidate.
“It’s very important, given the significance of this particular board, that you have a very experienced, independent chair who is familiar with the subject matter, who will be able to bring together the various different component parts of the board to focus on a broad range of things to do,” she says.
Matthew Rowe, chief executive of Countplus, says his appointment to the board of FASEA is “a privilege and an honour”.
“I am excited about working on behalf of the government, our professional community and consumers and finding a better way forward for our profession into the future,” he says.
Mark Brimble, professor of finance at Griffith University and chair of the Financial Planning Education Council (FPEC), says the academic community has been working on higher education standards for financial planners for more than five years.
“We are looking forward to being able to take that to the entire sector,” Brimble says. “The academic community has a lot to contribute, not just through education standards but in the development of a body of knowledge. I am looking forward to engaging the broader academic community in the work of the authority as it goes forward.”
Both Brimble and Rowe are members of the Professional Planner advisory board.
The FASEA board will inevitably have its critics, because everything in financial services, and in particular financial planning, has its critics. There will be those who complain that their own narrow, peculiar interests are not explicitly represented on the board. But that’s because their interests are exactly that – narrow and peculiar. The task of the FASEA board isn’t to pander to every little specialist interest group, nor to kowtow to the big end of town. Its task is to fearlessly and thoroughly develop educational, professional and ethical standards to apply to every person who gives professional financial advice.
Independent minds
Several of the FASEA directors have previously demonstrated themselves to be independent of both mind and action, and prepared to stand on matters of principle.
In 2004, Walter was a non-executive director of National Australia Bank when it revealed about $360 million in losses due to rogue foreign exchange trading. Walter raised questions about the independence of an investigation into the trading and conflicts of interest, causing a board rift that eventually led to the resignation of several directors and the chair.
In an interview at the time with the ABC, Walter said: “Boards need to be meritocratic, not autocratic, not bureaucratic. They should evaluate ideas according to their quality, and not the standing of the person who has raised them. In simple Aussie footy parlance, they should play the ball and not the man.”
In 2016, Catriona Lowe, now a director of the Financial Ombudsman Service and a former chair of the Consumers’ Federation of Australia, quit a hardship program set up to help investors in Timbercorp, citing disagreements with Timbercorp liquidator KordaMentha over how the scheme was run.
Michael O’Neill, a former chief executive of National Seniors Australia, was a voluble critic of efforts by the Abbott government to water down elements of the Future of Financial Advice (FoFA) legislation. O’Neill said the government was “put[ting] big business ahead of consumers” through the proposed changes.
Rowe led the Financial Planning Association (FPA) through radical restructuring and repositioning. Under Rowe, in a double act with the association’s former chief executive, Mark Rantall, the FPA ditched its corporate membership – which meant that only individual, practising financial planners were eligible to vote and set association policy – and negotiated persuasively on behalf of the industry to ensure that the provisions of FoFA achieved the government’s stated aims while being more workable in practice for advisers than some of the initial proposals.
Rowe and Rantall stood up to the major banks and were instrumental in convincing them that higher education standards should be made mandatory for their financial planners. For a considerable period of time, it looked as though the banks funding FASEA in its initial phase would oppose Rowe’s potential appointment. It’s to the credit of all concerned that such differences have been put to one side. Indeed, any undue influence by the banks on the board of FASEA is difficult to discern.
Griffith University’s Brimble is a leading academic in the field of financial planning and his work with the FPEC has been instrumental in a national curriculum for financial planning courses adopted by about 17 universities across the country, with more to follow. There are few people in the country who understand more about how to develop, structure and examine bodies of knowledge specific to financial planning. Brimble’s expertise will be crucial on all issues to do with education standards, including ensuring the exam that all financial planners will be required to pass assesses the appropriate skills and competencies, and is structured and administered in a robust manner.
Simon Longstaff is essentially the face of ethics in Australia, including in financial planning, as executive director of the Ethics Centre. The Ethical Literacy Program was developed on Longstaff’s watch to raise awareness of and adherence to high ethical standards in the provision of financial advice. Institutions including AMP and BT Financial Group have put hundreds of their advisers through the program already.
Deborah Kent, like Rowe, is well known to the financial planning community, not only as director of her own financial planning business, Integra Financial Services, and an award-winning adviser and leading advocate for women and excellence in financial planning, but also as a past president of the Association of Financial Advisers (AFA), serving alongside the association’s then-chief executive, Brad Fox. The AFA’s members faced potentially severe dislocation from regulatory proposals, particularly the Life Insurance Framework, but the AFA and FPA worked together at an unprecedented level to ensure the best possible practical outcomes for advisers facing a range of regulatory upheavals.
Steve Somogyi is a 27-year veteran of National Mutual (now part of AMP) and an executive member of the Australian Prudential Regulation Authority.
Carolyn Bond is an adjunct professor at Deakin University and a director of the Legal Services Board (Victoria), which is responsible for regulation of the legal profession in that state.
FASEA board appointees
| Catherine Walter | Catherine Walter is deputy chairman of the Victorian Funds Management Corporation and a member of the Reserve Bank of Australia’s Payment Systems Board. She is also chair of the Melbourne Genomics Health Alliance, trustee of the Helen Macpherson Smith Trust and a director of the Australian Foundation Investment Company. |
| Matthew Rowe | Matthew Rowe is the chief executive and managing director of Countplus. He is a former chair of the Financial Planning Association and former managing director of the financial planning business Hood Sweeney. |
| Deborah Kent | Deborah Kent is the managing director and founder of Integra Financial Services. She is also a former president of the Association of Financial Advisers. |
| Stephen Somogyi | Stephen Somogyi is a director at Guild Group and UniSuper and an adviser at Monash University, Victoria University and the University of Melbourne. He is also a former executive member of the Australian Prudential Regulation Authority. |
| Catriona Lowe | Catriona Lowe is a director of the Financial Ombudsman Service, Legal Practice Liability Committee (Vic) and Telecommunications Industry Ombudsman and a co-chair of the ACCC Consumer Consultative Committee. She is also a former dhair of the Consumers’ Federation of Australia. |
| Carolyn Bond | Carolyn Bond is a director of the Legal Services Board (Victoria), Debt Repayment Service Board and Jan Pentland Foundation. She is also an adjunct professor at Deakin University and a former Co-chief executive of the Consumer Action Law Centre. |
| Michael O’Neill | Michael O’Neill is the former chief executive of National Seniors Australia. He is also a former chief executive of the Australian Gold Council and AgForce Queensland. |
| Simon Longstaff | Simon Longstaff is the executive director of the Ethics Centre. He also holds board positions with the Banking and Finance Oath, BHP Billiton Forum of Corporate Responsibility, BT Professional Standards Council, Westpac Stakeholder Council, IAG Ethics Committee and AUSTRADE Ethics Committee. |
| Mark Brimble | Mark Brimble is a professor (Finance) in Griffith Business School at Griffith University. He is also chair of the Financial Planning Education Council and a member of the Professional Planner Advisory Board and Tertiary Education Quality and Standards Agency panel of experts. |
