The advice industry has an opportunity to respond to the government’s plan to water down education standards after Treasury released a consultation on the proposal in December.
Treasury’s policy paper, Education Standards for Financial Advisers, seeks feedback from stakeholders on the proposal – first broached by Labor’s shadow financial services minister Stephen Jones – to exempt advisers with ten years of experience (in the preceding 12 years) and a clean compliance record from FASEA’s equivalent degree requirement.
The consultation is the first effort from the minister for superannuation, financial services and the digital economy, Jane Hume, to audit settings after taking responsibility for the education and training standards from FASEA.
Under the draft proposal, qualifying advisers would only be required to complete a tertiary level unit on the Code of Ethics in order to continue providing financial advice.
While the proposed carve-out has the potential to slow the tide of experienced advisers leaving the industry and keep more mentors available for younger advisers, some have voiced concerns that the move would be a major step backwards on the industry’s quest to be a considered a profession alongside comparable sectors, and weaken broader consumer trust levels.
The proposed amendment would create a “two-tier system”, Integra Financial Advice’s Deborah Kent told Professional Planner in December, with clients having to make their own enquiries as to whether their adviser is degree-qualified.
The carve-out could also undermine the work done by advisers to complete the equivalent degree requirement. For many, the silver lining to extra time and money spent studying was that they not only bolster their own standing, but also become part of a degree-qualified cohort of professionals.
With no end-date specified in the proposal, the setback to professionalism could also have an extremely long tail. Advisers that qualify for the exemption could theoretically remain in the industry until retirement, which would make a degree-qualified cohort of professionals unlikely for another 25 years or so.
The proposal is not set in stone, however, with the consultation an attempt by the government to leverage Treasury and garner feedback on the plan. Any amendment to the existing legislative instrument is “subject to feedback received” from the consultation, Treasury notes.
Specifically, Treasury is keen to understand what the impact of the proposed carve-out would be on industry and stakeholders, “including the cost to business”, and whether the proposal meets the policy objective of streamlining education standards while balancing recognition of prior experience with the need for an education benchmark.
Further, Treasury wants to know whether the professional year standards for provisional advisers should be amended to require additional study, “to complement the broadening of the relevant fields of study”.