July 11, 2018
A proposed 65% pass mark will be required for all advisers taking the new Financial Adviser Examination.
Guidance for the exam has been released by the Financial Adviser Standards and Ethics Authority, in which it proposes that, in addition to an overall 65% pass mark, those taking the exam will also be required to achieve a minimum 75% pass for FASEA’s Code of Ethics component, and a minimum 50% pass for each of the other four components being examined.
The five examination components, and the weighting proposed to apply to each section, comprise:
- Corporations Act (emphasis on Chapter 7 – Financial services and markets) – 30%
- The FASEA Code of Ethics – 15%
- Financial Advice Construction – suitability of advice aligned to different consumer groups – 20%
- Behavioural Finance: Client and consumer behaviour, engagement and decision making – 10%
- Applied ethical and professional reasoning and communication – 25%
Existing advisers (as at 31 December 2018) will be required to have passed the exam by 1 January 2021, while new entrants from 1 January 2019 (or those returning to the industry from that date) will be required to pass the exam after they have completed their tertiary degree, and before commencement of their professional year.
The proposed format of the exam itself comprises 75 questions split between a mix of multiple choice and written responses, a substantial part of which will be based around case study references.
…the examination relies more on the application of [factual] knowledge to actual financial advice scenarios
In its guidance paper (click here), FASEA emphasises more than once that, “Although the questions can rely on a factual knowledge base, the examination relies more on the application of that knowledge to actual financial advice scenarios.
FASEA appears to be taking a tough position on advisers who do not pass the exam on their first try. It notes that it expects individuals will have the ability to apply for a resit, but only in what it refers to as “… exceptional circumstances (e.g. Illness).”
The Authority adds that individuals will be able to sit the exam for a maximum of two resits, where there will be a defined period between each resit.
It notes that any reference material (electronic or hard copy) during the exam will not be permitted, that mobile phones and other equipment (including pens and paper) must not be taken into the exam room and that access to the internet will not be permitted in the exam rooms or in the examination waiting areas.
FASEA is soliciting broad industry feedback on almost every aspect of the exam and the processes supporting it, and encourages submissions from advisers and others, which will be open until the end of July.
Submissions must be provided in writing to FASEA’s dedicated consultation email address at: ‘firstname.lastname@example.org’.