Controversy Surrounds New ASIC Adviser Register

8

The release by Treasury of the draft arrangements for the new public adviser register has been marred by controversy.

Acting Assistant Treasurer and Minister for Finance, Senator Mathias Cormann
Acting Assistant Treasurer and Minister for Finance, Senator Mathias Cormann

Late last week, Treasury issued for consultation the draft regulations which will govern the new national adviser register. The register, to be maintained by the Australian Securities and Investments Commission (ASIC), was one of the additional consumer protection measures announced by the Government as part of a deal with the Palmer United Party to support its Future of Financial Advice (FoFA) amendments.

Announcing the details of the initiative in October, Acting Assistant Treasurer and Minister for Finance, Senator Mathias Cormann, said the register would contain significant information about individual financial advisers, including their licensee, the product areas they are licensed to advise on, and the individual’s qualifications and professional membership status.

However, the draft Regulations, and accompanying Explanatory Statement, do not include a requirement to collect information on education qualifications or whether the adviser is a member of a professional association. The only reference to qualifications within the Treasury’s Draft Explanatory Statement appears to be the following:

We are working with all relevant stakeholders on efficient and effective ways to lift professional, ethical and educational standards

‘It is intended that the register will, in time, also contain educational qualifications and professional association membership information. This would require further amendments to the Principal Regulations.’

Following the release of the consultation documents, a mainstream media report accused the Government of ‘watering down’ the register, saying professional membership and education qualifications were “fundamental pieces of information”.

Senator Cormann was quick to issue a response to the report, reiterating that the Government remained committed and on track to deliver its enhanced, industry-wide public register of financial advisers.

According to a statement from the Senator’s office, as of March 2015, the register of financial advisers will include:

  • The adviser’s name, registration number, status, and experience
  • The adviser’s qualifications and professional association memberships
  • The adviser’s licensee, previous licensees/authorised representatives and business name
  • What product areas the adviser can provide advice on
  • Any bans, disqualifications or enforceable undertakings
  • Details around ownership of the financial services licensee and disclosure of the ultimate parent company where applicable.

Senator Cormann acknowledged that, at present, the minimum adviser qualification requirement is governed by ASIC’s Regulatory Guidance 146.

“We are working with all relevant stakeholders on efficient and effective ways to lift professional, ethical and educational standards across the financial advice industry. As we progress relevant improvements, in particular to educational standards, those improvements will immediately be reflected as appropriate within the structure and operation of the financial adviser register,” Senator Cormann said.

Further controversy erupted over the same media report’s claim that not all professional association designations carried the same weight. The article stated that the Association of Financial Advisers (AFA) designation, the Fellow Chartered Financial Practitioner (FChFP) enables advisers without degrees to gain a qualification by completing four subjects of a non-technical nature, and without having to pass an ethics component.

AFA CEO, Brad Fox
AFA CEO, Brad Fox

AFA CEO, Brad Fox, said the statement was “quite simply wrong”, highlighting that the FChFP does require extensive technical knowledge assessment, and that one quarter of the designation is devoted to ethics and professional conduct.

“The FChFP is the most effective professional pathway by which an experienced adviser without a degree can attain a qualification that is assessed at a standard higher than that required by a student completing an undergraduate degree,” Mr Fox said.

“Professional financial advice is the result of the right knowledge, attitudes, actions and behaviours of advisers. Both advisers with a relevant degree and those with other qualifications and good experience, but without a degree, need to have access to a professional designation course that supports them in the provision of quality financial advice.”

The industry is invited to provide feedback on the Treasury’s proposal, and submissions will remain open until 17 December. Click here to read the draft Regulations.



8 COMMENTS

  1. Creating a ‘two class’ system could be the side effect of over emphasising financial planner’s education. Although I am a Certified Financial Planner and have a Masters degree from Cambridge University, this does not indicate that I am any better than a planner with no degree, but lots of ability.

  2. Another complete waste of time, resources, more bureaucracy and red tape!

    Could you imagine Mum & Dad client going to a register to make a decision on an adviser?

    Stop the witch hunt- get our industry out of politics!

  3. Well said Anna-Louise. The technical is easily learned, it is the ability to influence clients to change their behaviour, explain technical concepts in simple ways to allow clients to really understand, identify and manage risks and a passion to truly help clients that make a good adviser. I dont see any of those Units in many degrees, but they are part of the FChFP course! I dropped out of the 3rd year of my Marketing degree many years ago to start my first business. Does that mean I will never be a good Financial Adviser? Does my 15 years of life and business successes and failures not provide a lot more value to clients than an extra 8 months studying Marketing? Or Biology? Or Engineering?

  4. I can see all points of view. Degree does not mean good and no degree bad adviser.
    But what is the minimum entry standard we want? there is a reason every docotr has their degree and other qualifiacations on the wall of their surgery, who would employ a self trained electrician?
    Having said that in 5 years not one client has asked me my qualifications. Its in the FSG and hanging on the wall in the corner but not every cleint comes in. Its not my degrees that gains or loses me clients.
    Industry needs to set a standard (no matter how low) and then go from there.

  5. The requirement to access the CFP program via a degree is only a relatively new requirement meaning that while I’m sure quite a few CFPs have degrees, it wasn’t a requirement for the vast majority of them.

    In fact when the CFP was first brought about there was significant grandfathering of planners who had completed the old Diploma of Financial Planning (advanced diploma equivalent) by a certain date and had relevant experience were simply given CFP status without the requirement of an additional exam or course. There has been very little commentary on that concession coming from the FPA.

    I fully support having a degree but no one industry body designation can attest to having that as their basis from day one, at least the AFA have had additional education from day one.

    While a degree doesn’t make a good or a bad adviser. Degrees teach the person to undertake research and analyse complex situations and they certainly prove far greater competence on being able to analyse client’s needs. Certainly more than a grandfathered CFP.

    Bring on the new requirements as we need to be held in the public’s eyes as a profession and we need less people coming in on a whim that are going to do the wrong thing.

  6. Wait a minute, is this not a part of the regulations recently disallowed?
    The register was an amendment to get the regulations through the Senate, but the regulations have now been disallowed, ALL OF THEM.

  7. Amazing to think that there is all this regulation being directed at financial planners and yet there are so many unlicensed people out there claiming to be independent financial educators who are front men to sell property that they have an interest in.

    There are lives being destroyed as we speak and our Fed Government continues to turn a blind eye to this disgraceful practice.

    Mind you, Labor and the Greens don’t seem to care either. It seems they are more interested in the almost $2 trillion pot of superannuation…I wonder why?

  8. I have a degree in Metaphysics: Would that make me any more capable than a planner with a high school certificate? I would think, & say, NOT!

    This overemphasis on education by politicians who, many at least, themselves have NO such qualifications.

    Let’s face facts — all Government legislation and all bodies set up to “patrol” the industry have only the capacity to act AFTER an event actually occurs. How do you put out a fire before it –the fire–actually begins? And how do you stop a riot before the riot starts? Would the police be allowed to arrest and to jail me simply because they felt that I was going to throw eggs at politicians? (Let’s face it many, many of them–the pollies–deserve a proper “egging”!)

Comments are closed.