December 11, 2018
FASEA’s view of financial advisers has been questioned by the AFA which has asked the education body why new Continuing Professional Development (CPD) standards have ethics training occupying nearly twice the time allocated to professional and technical reading.
In its submission to FASEA following the release of the latter’s CPD instrument (see: FASEA Releases CPD and Ethics Instruments), the AFA stated that it assumed the FASEA Board had benchmarked the CPD requirements for advisers with other professionals.
The AFA then added, “It is in this context that we ask the question of why FASEA have chosen to set a nine-hour requirement for ethics and professionalism, yet has limited the number of hours of professional and technical reading to just four hours?”
“…we ask the question of why FASEA have chosen to set a nine-hour requirement for ethics…”
The submission noted that CPA Australia and Chartered Accountants ANZ had no mandated ethics training requirements, but did have a cap of 10 hours for professional and technical reading, while the Law Society of NSW had a total of 10 hours CPD per year and requirement of 1 ethics hour per year.
The AFA pointed out the CPD standards would apply for the long term and should not be applied on a view that was not reflective of the wider advice sector.
“Whatever the Board might think about the current level of ethics and professionalism in the financial advice sector, this does not reflect the conduct of the majority of advisers and should not be the basis for overloading the profession with ethics and professionalism CPD on top of the other ethics education that is otherwise required to pass the exam and to achieve degree equivalency,” the submission stated.
It also questioned the lack of focus on technical knowledge claiming that nine hours of ethics training and only five hours for technical competence “…suggests a lack of understanding of the financial advice profession and the greatest risk to consumers, which is with respect to incorrect advice, more so than unethical advice. In our view the balance between technical and ethics CPD hours is totally disproportionate”.
“We can only ponder the reasons for an independent regulator, such as FASEA, to push such an unachievable time-frame…”
The Association was also critical of the limited time-frame given to advisers and licensees to implement the new CPD guidelines stating the 1 January 2019 was “…absolutely unreasonable and the current draft Legislative Instrument lacks the required level of clarity and specificity in order for it to be implemented”.
“Put bluntly, this is an impossible proposition for over 2,200 advice licensees to implement, at this time of the year with only three weeks left before it is due to commence,” the submission added.
The AFA continued to question the pace at which FASEA sought to have the CPD changes in place, writing “…the best outcome is always achieved on the back of sensible, considered, and pragmatic reform with time to plan, prepare and implement”.
“We can only ponder the reasons for an independent regulator, such as FASEA, to push such an unachievable time-frame and proposal in the current environment,” it added.
The submission also raised concerns about the absence of any reasons to change from the current CPD delivery which based upon obligations within RG146 and the absence of any feedback to industry stakeholders after the initial consultation period on CPD requirements earlier this year.