The Financial Planning Association of Australia (FPA) released a white paper late last week on the future of Australia’s financial planning profession.
The paper includes a 10-point road map intended to guide the development of the industry in order to arrive at the Association’s desired outcome, which is to achieve a relevant future advice framework that is both workable and ethical .
In seeking to raise the standards of financial advice in Australia for the benefit of both consumers and the advice profession, the Association’s 10-point plan includes reference to education and competency requirements for advisers, the enshrinement of the term ‘financial planner/adviser’, the removal of all commissions from the ‘general advice’ space, the ability for consumers to be able to access affordable advice and future regulatory requirements. The 10 Point Plan includes:
- Raising the minimum criteria so that the term financial planner/adviser is restricted under the Corporations Act and the individual must:
- Have membership of an ASIC approved professional body; and
- Hold minimum education standards of a relevant university degree, and three years’ experience over a 5 year period; and
- Maintain minimum continuing professional development of 90 CPD points over a triennium.
- Amend the law to develop criteria so that ASIC can approve professional bodies such as those prescribed in the Tax Agent Services Act or the approach proposed by the FSA in the UK.
- The immediate establishment of a financial planner education working group to develop a considered, strategic and holistic financial planner education framework. The aim is to lift minimum education and experience standards to a relevant university degree and three years’ experience over a 5-year period.
- The term ‘Commission’ to be defined and then banned under the General Advice exemption.
- General Advice should be re-termed ‘general or product information’ and be limited to the provision of ‘factual information and/or explanations’ relating to financial products.
- The development and implementation of a co-regulatory design, which recognises and facilitates the role of ‘approved’ professional bodies in assisting ASIC to achieve its consumer protection and confidence mandates.
- The establishment of a public register which is managed by ASIC, with a requirement for all financial planners/advisers (including employed representatives) who provide personal advice to be individually registered.
- ASIC should have suspension powers for financial planners/advisers suspected of material and systemic breaches of the best interest duty. ASIC must have a justifiable position and the financial planner/adviser has the right of appeal to AAT.
- Once the Federal Budget position has been improved, that the government commence consultation with industry to determine the benefit to have the preparation of an initial financial plan be expressly stated to be tax deductible.
- A review into lifting the criteria of a sophisticated investor.
Reminding the industry that the FPA banned its members from receiving commission payments on investment and superannuation products in 2009, its CEO Mark Rantall noted that “In 2014, in these last days of debate over the final form of FoFA, it is time to go to the next step on behalf of all Australians and the emerging profession of financial planning”.
Click here to download the FPA’s white paper on the future of Australia’s financial planning profession.
