Financial Adviser Standards and Ethics Authority chief executive Deen Sanders says new education, ethical and professional standards are an opportunity to bring genuine change to the financial planning industry but it will require “a group effort” to get there.
At the Personal Finance and Investment Symposium at the University of Tasmania yesterday, Sanders said FASEA is determining timelines for each of the tasks it is required to undertake under the Corporations Amendment (Professional Standards of Financial Advisers) Act.
He said Minister for Revenue and Financial Services Kelly O’Dwyer had made it clear in the second reading speech for the bill that the intent of the changes is to raise the professional, education and ethical standards of financial advisers.
Sanders’ comments came one day after Financial Planning Academics Forum co-chair Adrian Raftery, also at the PFIS, accused FASEA of not consulting with academic institutions before announcing it would accept courses accredited by the Financial Planning Education Council (FPEC) for degrees under the incoming education standards.
According to the act, advisers will be required to hold a degree or higher, or equivalent, qualification; pass an exam; undertake a professional year; and comply with a code of ethics. It’s FASEA’s role to approve how each of those elements is structured, according to the timetable set out in the legislation.
“There’s a detailed and deep engagement with each of those duties, and we have a particular timeline that we’re working to,” he said.
There are more than 25,000 names on the Australian Securities and Investments Commission’s financial advisers register (FAR), and “they will need the whole infrastructure of industry all working to the common goal of improving consumer outcomes”, Sanders said.
That includes not only financial planners and advisers, but also licensees, regulators and service providers, and it clearly also includes the academic community, he told PFIS.
“We are all in the delivery of this together,” he said.
“If we are to succeed in this, it really does require an engagement from all parties, financial advisers in particular – who, I am frequently reminded, of course, are waiting.
“In our planning, we always return to the purpose of the Act: to raise the education, professional and ethical standards of advisers. It is reasonable to assume that this means something will have to happen for most people in the industry – a large percentage of the 25,440 of them – between now and 2024.”
Sanders said FASEA’s statement last month that it would approve courses already accredited by the Financial Planning Education Council (FPEC) had provided certainty for individuals who enter the industry after January 1, 2019. He also said FASEA’s acceptance of FPEC accreditation provides an approved pathway that existing advisers can take – an FPEC-accredited degree – if they wish to do so, even before FASEA deals formally with requirements.
Courses that FPEC approves will automatically be OK’d by FASEA, until such time as it issues an accreditation standard of its own and introduces an appropriate transition period. That includes courses that FPEC has already accredited, and any it may accredit before FASEA’s own standard comes into play.
Sanders said FASEA understands the industry’s desire for certainty around education requirements for existing advisers. He added that the standards authority would address requirements for existing advisers as a separate exercise, in a way set out in Section 1546B of the Corporations Act, which provides that all existing advisers must meet new education standards by January 1, 2024.
He said FASEA recognised the transition to the new standards would be challenging for everyone concerned.
There is going to be an effect, it’s going to [have consequences] – but we think it can also frankly be positive and exciting,” he said.
“Raising the professional, education and ethical standards is what this law is all about. It’s not about negotiating minimum compliance requirements to get to the deadline. It’s about positive change in the marketplace.”