The AFA and the FPA have acknowledged and welcomed the Government’s announcement on the winding up of FASEA with its role to be divided between Treasury and ASIC to create a single disciplinary body for financial advisers. (See: FASEA to be Dismantled)
AFA CEO, Philip Kewin says in a statement that his organisation has been continually calling for the streamlining of regulation relating to financial advisers “…and while there is still more detail to come, this is a positive step towards removing unnecessary duplication for financial advisers …”.
“Financial advisers and the advice industry as a whole have been hit with layers and layers of regulation that have increased the cost to provide advice without any clear consumer benefit,” Kewin said.
He added that while there is still much work to be done, the organisation supports moves that remove red tape for advisers and improve outcomes for consumers.
Kewin noted too that while FASEA will be wound up, advisers will need to continue to meet their obligations to pass the FASEA exam and ultimately obtain a degree equivalent.
While functions currently undertaken by FASEA will be transferred to other agencies, advisers will still need to pass the FASEA exam by the end of 2021 and achieve the education standard by the end of 2025. “We expect further news in relation to the FASEA Code of Ethics.”
Meanwhile FPA CEO Dante De Gori welcomed the Government’s commitment “…to simplifying regulation and the first steps towards giving Australians a better chance to access and pay for financial advice they need, when they want it”.
He says the FPA has been calling for a simplification of standards setting and the establishment of a single disciplinary body to reduce red tape and “…untangle an unreasonably complex regulatory framework that is stifling the financial planning profession and driving up the cost of advice”.
“This announcement is a step in the right direction, particularly for financial planners who, in some instances, are struggling to remain commercially viable as the cost of advice has skyrocketed in recent years as regulatory and compliance costs continued to rise.”
He also noted that the FPA has continuously advocated for the reduction of ‘regulatory bodies’ that are adding unnecessary duplication, complexity and costs and for the establishment of a single disciplinary body.
“This body should have primary responsibility for government oversight of the conduct of financial planners, setting mandatory professional standards, investigating potential breaches of mandatory standards and law, and applying discipline,” De Gori says.
He added that the Government has yet to provide a timeline for this change, but it will require legislation and is likely to occur by the end of the 2020/21 financial year when FASEA’s funding is due to run out.
He reiterated that it was important to note that there is no change to the actual standards and obligations on financial planners and the law still requires completion of the exam, education standards and adherence to the Code of Ethics.
A statement from FASEA says legislation implementing these reforms is intended to be introduced into Parliament in the first half of next year and that it will work closely with Treasury and ASIC to ensure an orderly transition to the new regulatory framework.
In the interim FASEA continues to administer its functions under the Corporations Act including administering the adviser exam and approving bachelor or higher degrees and equivalent qualifications.
“FASEA notes that the legislated time-frame for existing advisers to pass the FASEA exam by the end of 2021 has not changed and encourages advisers who have yet to pass the exam to continue their studies and sit the exam.”