There has been an almost universal thumbs up from industry stakeholders in welcoming the proposed extensions to FASEA’s exam and qualifications timelines – almost (see: FASEA Extensions Confirmed).
Key organisations were quick to voice their support for this move, including the AFA, which was able to relay to delegates the announcement by Senator Jane Hume at the final session of the 2019 AFA Conference at the end of last week:
AFA
In a subsequent message to members, AFA CEO, Phil Kewin, said the Association “…warmly welcomes this announcement as a reflection of the hard work done at many levels, including …our joint work with the FPA, and advisers talking to their local members to communicate the challenges presented by the current deadlines.”
…the cumulative pressure of everything that is happening has been very confronting
Kewin also acknowledged Assistant Minister Hume for taking an active interest and recognising the challenges with the original deadlines.
He noted financial advisers have a lot to be thinking about at this point in time, “…and the cumulative pressure of everything that is happening has been very confronting,” he said, adding:
“The FASEA process has taken a lot longer than expected. The new time-frame gives advisers the appropriate time to prepare for the exam and to deal with their other challenges.”
FPA
In keeping with the emerging industry theme of unity (different voices but one message), the FPA’s response referenced its joint efforts with the AFA.
CEO, Dante De Gori, said the Government’s decision to announce its intention to extend the original deadline means existing financial planners are no longer being unfairly disadvantaged by delays from FASEA in rolling-out its exam and its new Code of Ethics:
The Government has done the right thing…
“The Government has done the right thing by proposing to extend the deadlines for all existing financial planners to sit and pass the FASEA exam and meet the education standard.
“The proposed new deadlines will give existing financial planners more time to study, ensuring that these reforms are successful at raising the bar across the profession.
“We’re pleased that Minister Hume has listened to the feedback from our members and been willing to work with the FPA and AFA jointly to deliver a better outcome for all financial planners and their clients.”
FSC
Joining the main adviser associations in its warm reception was the main institutional association, the FSC, whose CEO, Sally Loane observed:
This is a sensible tweak to the reforms
“The Minister is demonstrating that she is listening to the advice industry and is acting to strengthen the foundations of the reform package. This is a sensible tweak to the reforms, and one that will alleviate pressure on the advice industry” said the CEO, who continued:
“While the professional standard reforms are very important, existing advisers need adequate time to transition to the new landscape. The extension of the time to sit the exam for existing advisers will ensure that they have the full two years to sit the exam.”
Almost
The (almost) universal support for the proposed extensions has been given perspective, however, by adviser feedback, which has been mixed.
Some advisers have taken the opportunity to share their views on the underlying premise of the FASEA exam and minimum professional standards, which argue against the principle of these already-legislated reforms.
Meanwhile, other adviser feedback has revealed how commercial, business-defining decisions, have already been taken and initiated based on the assumption that the minimum education standards, in particular, would have to be met two years before what is now proposed…
For those who saw man land on the moon and can still remember it, would also be reminded of, that what has been negotiated on behalf of advisers, is the same game the unions used to pull in the 60’s and 70’s, where you make outrageous demands, knowing that there is going to be a negative reaction and fight back.
So you build into your outrageous ambit claim, irrelevant and “negotiable” points that you are willing to back down on, in order for you to push through your real agenda.
This is a standard tactic that has been around as long as Public servants, who as we all know, their main purpose in life is to feather their own nests and keep themselves in jobs, by creating road blocks and frustrating the rest of the world.
Extending the time to attain unnecessary and expensive bits of paper, does not fix the real issues, it just delays the inevitable.
The FPA and AFA are so polite and are not wanting to upset any politicians or ASIC, so they are all skirting around the main issue and are falling into the trap that the unions used to pull and now the Government and ASIC are pushing, which is to make unworkable demands and then be seen to be the good guys, by giving back irrelevant scraps, while trumpeting how the Government is listening to the Industry concerns.
All that has happened for the Retail Life Insurance Industry, is to keep it on Life Support for at best, a couple more years.
The one hope and what “actually” happens in the real world with most Industry, is that the Government will be quietly lobbied by the Life Insurers when they realise their own prior “ambit claim” to screw advisers has backfired and there will no advisers willing to get smashed over the head, causing thousands of the most experienced risk advisers to exit, which of course defeats the Best Interest Duty for everyone due to the fact very little Life and Disability Insurance will be sold to help Australian families in their time of need.
Yep….that pretty much sums it Jeremy. Totally support your opinions of the FPA and AF
I feel that the AFA and FPA need to appear to respond in a positive way, but the underlying issue still remains – ALL advisers need to complete a degree. Setting the education requirements for new entrants into this industry is still a good idea, but for those of us who have been around for many years and some for decades, our existing qualifications and experience still amounts to nothing in the eyes fhe govt.
Senator Hume is acknowledged for taking an “active interest…” I know she is new in the job but an active interest should include a full awareness or at least being made aware of the impact LIF is having on this industry – reinstating commissions and doing away with this evil 2 year clawback are not negotiable for many risk insurance specialists. If action is not taken on these two issues, then I fear we will still a mass exodus in the next few years.
My cynicism aside, there does seem to be a bright spot – something at least seems to be happening and that is the 2 year extension for the degree. But there is still a lot to do to get things back on track.
May I suggest that the FPA include a page on their website – and place headings such as LIF – Lowering of Commissions; LIF – two year Clawback; FASEA requirements; and maybe others. Allow advisers to add their comments under each heading so they can express how they feel about the respective issue and the impact it is having on their business. Advisers voice their concerns on RiskInfo, but a page dedicated to risk specialists only, may reveal at a glance just how many advisers are negatively impacted by this mess – almost like a petition.
Concerned, I agree with almost everything that you say, but having been a risk adviser for over forty years, is the two year claw-back really an issue? If a product is set up correctly, bar a rare personal calamity occurring for a client, how often would a policy really be cancelled inside two years? When i started in the industry in 1978, we had a two year clawback and it was never an issue then. I don’t see it as an issue now. Just a red herring, that we should concede to the law-makers and focus on the bigger issues that really do matter.
Old Fella, I agree with your point and no adviser worthy of being in this industry should change policies within 2 years. The issue is when insurers increase premiums in the 2nd year well in advance of what should be a normal “Stepped” increase, if that is the case and/or increasing Level premiums. Although the insurers attempt to justify such justified, the adviser has to wear it when the client cancels. It has been suggested that if the adviser is responsible for a policy change within 2 years, then they should wear the clawback, but not when the insurer increases the premiums in year as I’ve said. If this idea can be correctly monitored, then OK – but I can’r see how it can. I’ve been in this industry for 25 years as a rsk specialist and a 1 year clawback has never been an issue. Why is it now? Having said that, if commissions can be reinstated to the pre-LIF levels of 80/20 and the FASEA requirements can be changed, then they are steps in the right direction.
Hi Old Fella,
It is always good to read your well considered thoughts.
The issue I have with the 2 year and with some Life Companies, 3 year claw back, is that Australians are getting fed up with high 2nd and 3rd year premium increases that can be as high as 25% based on normal age and indexation increases.
It appears to be a way for Life Companies to once again reduce adviser earnings by having a reduced first year premium which they pay the commission on that lower premium and then load up the premium every year after year one.
Clients do not see a discount in year one, they see a massive premium increase in year 2 and 3 which creates issues.
The Life Companies need to get their act together and build into their premium modelling a more consistent premium that has smaller premium increases each year.
The way to do that is to decrease the levels of cover across the board for the premiums paid and build a better premium model that gives clients a better chance to budget and maintain their covers for the long term.
All the Life Companies are currently doing is to sell discounts now, to get New Business and hope clients can afford to, or want to keep paying escalating premiums, when their incomes are not increasing to match the Insurance premium rises.
It is self defeating and leads to clients becoming angry and wanting to cancel.
Dante DeGori is quoted above as saying
“The proposed new deadlines will give existing financial planners more time to study, ensuring that these reforms are successful at raising the bar across the profession.”
How will it ensure that these reforms are successful?
I cannot see the connection that he is trying to make as the “bar” is unchanged.
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