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.
Thank goodness for the AFA and the ongoing representation of its members. Nevertheless, the article just goes to show yet again, how out of touch the government, regulators and FASEA are, and why so many advisers will leave the industry in the next few years. I said it last week in the comments section following the Chris Blaxland-Walker article – one way to avoid the collapse of the retail life industry, is for ALL major insurers and the AFA to go to the government collectively and put forward the case to have LIF amended – reinstate commissions, get rid of this evil 2 year clawback period and stop the unrealistic nonsense being imposed by FASEA.
FASEA is fast becoming a FARCE. So CPD points are weighted towards ethics. ethics is simple in construct. Do not seek to do harm to the consumer or your profession. Simple. There is NO justification for such nonsense in terms of the requirement for CPD weighted heavily on ethics. Last time we checked, it seemed that those running institutions need a severe course in understanding ethics. It was after all there lack of ethics that allowed for the thieving of money from consumers. These folk in FASEA need to find something else to do if they think ehtics course will stop the thieving. More effective would be a jail cell.
Also on FASEA, we also read that the cost of FASEA’s exam will be some $1.976 million in the current financial year amd $1.952 million in the following 2 years making for a total of $5.88 million overall. Yet the cost for staff and salaries amount to $4.433 million and board costs equal some $2.304 million.
Effectively, this means that the authority governing education standards for financial planners will be in DEFICIT over the three year period !.
The business plan hosted by Treasury has funding from 8 institutions, namely ANZ, Bendigo Bank, CBA, Macquarie, NAB, Suncorp, Westpac and AMP. The very entities that created the damn mess in the first place. Have we forgotten the Royal Commission on this.
Overall folks, this is yet another attempt at stupidity. The inmates are indeed in charge of the asylum. Resist
While I understand the view applied by AFA, as a profession there is a wider community view that Financial Planners and Advisers are unethical. This can be seen via the revelations on the RC. However, I do beleive there should be a greater focus on the technical aspects of advice as well.
Ronald – I watched the RC most days when advice was the subject. With the exception of the self–promoting Sam Henderson, who embarrassed both the AFA & the FPA, I did not see many advisers DIRECTLY criticized or under the glare of Ms Orr. Yes, some got mentioned indirectly in the context of movement between AFSLs, but no advisers appeared. BUT THERE WERE PLENTY OF FOLKS FROM INSTITUTIONS. So what exactly are you referring to in terms of the RC. And secondly, there is a consistent survey result from people who actually USE advisers that their particular adviser is good. I cannot accept your assertion, at least as far as it applied to non bank advisers in the RC
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