If 2017 is anything to go by, 2018 is set to be another busy year for the FPA. In the last 12 months, we have completed more than 70 submissions, five white papers on the professional standards and education framework, a member consultation on the new FPA policy plan, and a report showing the links between the fintech industry and the financial planning process. We’ve also had over 90 meetings with government and regulators.
The big issue for the FPA in 2018 will obviously be supporting the Financial Adviser Standards and Ethics Authority. We can play an important part in setting the remaining professional and education standards. While the entry requirement for new or provisional financial planners has been set with FASEA’s acceptance of the Financial Planning Education Council curriculum and approved course list, we still await:
- finalisation of the degree equivalence standard for existing planners (consultation now in progress)
- the code of ethics
- standards for continuing professional development, professional years and exams.
The FPA has put much thought into these, through consultation with members, academics and the broader industry, to develop the five white papers. We are keen to help get the standards implemented and operating as efficiently as possible and get on with the job of helping members transition their careers and practices onto this new professional framework starting in 2019. There will also be a large amount of work with the Australian Securities and Investments Commission to ensure the implementation of code-monitoring bodies is completed in time for the January 1, 2020, start date.
Another big job for 2018 will be working on the implementation of the Australian Financial Complaints Authority (AFCA). Merging three organisations is no small feat, particularly since the company that will become AFCA must be set up from scratch while the existing bodies wind down. Also, the cost of this transition might be substantial at a time when a number of other cost increases are occurring.
The rising regulatory costs of providing advice are a critical concern for the FPA this year. In 2017, ASIC’s user-pays model was introduced, and this year we expect FASEA to move to an industry-funding model. In addition to costs associated with the startup of AFCA, there will also be expenses from Tax Practitioners Board registration and the new professional standards framework, which will include additional education for some planners and an exam for everyone. If the new limits on external dispute resolution are implemented, professional indemnity insurance premiums will also face upward pressure. Meanwhile, there are already revenue pressures for many practices and the potential threat of automated product implementation tools.
The ASIC Enforcement Review has been working to provide ASIC with additional powers around product regulation, licensing, sanctioning and the amounts of penalties. The recommendations of this review are likely to be announced by government early in 2018, and followed by the development of a work program. This will give ASIC the power to intervene prior to any harm to consumers.
Finally, the FPA will continue to work with government to implement the financial system inquiry’s recommendations around renaming general advice to product information, and reviewing the now 15-year-old retail/wholesale definitions to better protect consumers. It goes without saying that we will continue to recommend to government that advice fees should be tax deductible.
As if all that wasn’t enough, we still have plenty of work to do to help members understand and implement fintech tools to make their advice processes more efficient and engaging.
The recent announcement of a Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry will only add to what’s on the agenda, as the government has stated it intends to keep working on the above policies while the commission is in progress.
I expect things will get busier than we can even imagine in 2018.
Ben Marshan is head of policy and government relations at the Financial Planning Association.
