With a heavy burden placed on licensees and advisers, there are potential issues with misrepresentation of experience under the proposed experience pathway.
The government announced the draft legislation for the experience pathway in April, which requires advisers to make a declaration to their licensee confirming they have met all criteria.
Speaking on a podcast hosted by the AFA Gen Next, former AFA chief executive and now FAAA head of policy, Phil Anderson noted grey areas where adviser registrations weren’t as clear in the past placed risks on advisers and licensees.
“Both the adviser and the licensee will have skin in the game on this,” Anderson said. “The declaration will need to address they meet the 10-year full time equivalent qualification criteria and that they meet the clean track record.”
He said the track record aspect of the experience pathway is clear cut, pointing to the banned and disqualified adviser register and enforceable undertaking register.
“Given that ASIC has that data which can expect ASIC would take action against someone who claims they have a clean track record if they don’t,” Anderson said.
However he said confirming 10 years’ experience in the 15-year period will be a greater challenge for licensees to confirm.
“I’m not particularly worried about it so much for people who have been authorised representatives for that entire time because there’s an authorised rep register that goes back to the start of the FSAR [check] days at the start of 2003 or thereabouts.
With the Financial Adviser Register only being active since March 2015, Anderson said there will be advisers who may not have sufficient proof to provide, because they weren’t required to register under the old regime.
“We’re going to have complications about people who were salaried advisers because that data doesn’t sit on a register,” Anderson.
He added advisers who worked part-time for certain periods will also raise issues.
“The assessment of whether someone meets that 10-year full time equivalent requirement is going to need to be done very carefully,” Anderson said.
“There is some risk of it being misrepresented. I would think there should be enough controls around it, there are people who know these people who will be able to comment on whether they meet that requirement.”
Anderson said Standard 12 of the Code of Ethics should also be considered given it places an obligation on advisers to make sure their colleagues “are doing the right thing”.
“There is a risk, and it comes down to people who are unable to prove it through public record registers,” hesaid.
Trying to find a compromise
Anderon’s new boss, FAAA chief executive Sarah Abood, had noted the association is working to limit the damage of the education carve-out but he acknowledged this has been a hotly debated issue with a line in the sand drawn the advice profession.
“We’ve done surveys in the past and found half of our members are strong supporters and half are strongly opposed,” Anderson said.
The FAAA and its precursor associations have attempted to compromise with the 10-year sunset clause and greater recognition of experience in the education being proposals.
The association also suggested offering two subject credits for 10-years’ experience and three subject credits for 15 years, as part of the education standard.
“In recommending [the sunset clause] we also suggested that advisers should also have the opportunity to pursue the education pathway but with better recognition for the prior learning experience,” Anderson says.