{"id":31507,"date":"2015-11-03T17:21:53","date_gmt":"2015-11-03T07:21:53","guid":{"rendered":"https:\/\/riskinfo.com.au\/news\/?p=31507"},"modified":"2015-11-04T05:28:08","modified_gmt":"2015-11-03T19:28:08","slug":"education-changes-to-collide-with-lif-transition-timetable","status":"publish","type":"post","link":"https:\/\/riskinfo.com.au\/news\/2015\/11\/03\/education-changes-to-collide-with-lif-transition-timetable\/","title":{"rendered":"Education Changes to Collide with LIF Transition Timetable"},"content":{"rendered":"

Advisers preparing for the introduction of the Life Insurance Framework (LIF) are likely to be hit with a second round of changes over the next three years as new education standards are implemented.<\/span><\/p>\n

While the recent release of the Federal Government\u2019s response to the Financial System Inquiry (FSI) covered a number of key areas in raising the competency of advisers, others have been left out or only partially covered.<\/p>\n

This has raised concerns that advisers will face the introduction of rolling changes around education, ethics and professional standards without sufficient time to comply, at the same time as many are working through the three-year transition period of the LIF.<\/p>\n

A side by side examination of the recommendations of the Parliamentary Joint Committee into the professional, ethical and education standards of the financial services sector, released in December 2014, with the Federal Government\u2019s Response to the FSI released recently, shows some areas of the former have not been addressed in any way.<\/p>\n

A side by side examination of the recommendations of the PJC… with the Government\u2019s Response to the FSI…shows some areas of the former have not been addressed in any way.<\/h6>\n

PJC recommendations that have been addressed under FSI recommendations 24, 25, 29 and 40 include changing the term \u2018general advice\u2019 to \u2018product sales information\u2019 as well as limiting those able to provide financial advice to those registered as financial advisers.<\/p>\n

The restriction of this term as well as \u2018financial planner\u2019 was also covered in the FSI response as was the inclusion of a raft of adviser details on a centralised register, which has already been established by the Australian Securities and Investments Commission (ASIC).<\/p>\n

A recommendation by the PJC to lift education standards to a degree level was also supported in the FSI response but lacked detail around who it would apply to and when, while a PJC call for an independent council to set standards was given broad support.<\/p>\n

Ethics and Standards yet to be clarified<\/strong><\/p>\n

Notably, the PJC recommendations that have not been picked up relate to the role professional associations may play in setting benchmarks around continuing professional development, codes of ethics and professional standards and the mandatory membership of one of those bodies for people wishing to provide financial advice.<\/p>\n

\"Netwealth,<\/a>
Netwealth, Head of Governance and Advice, Phil Anderson<\/figcaption><\/figure>\n

Netwealth, Head of Governance and Advice, Phil Anderson<\/strong> said the PJC recommendations were comprehensive and had intentionally focused on education as well as ethics and professional standards.<\/p>\n

He said that ethics and professional standards should not be removed in favour of education and there was a need to ensure they were maintained in any further responses to the PJC or the FSI.<\/p>\n

Anderson said the Federal Government had indicated this was an ongoing work pointing to its statement under Recommendation 25 in the FSI Response.<\/p>\n

That statement said \u201cthe Government has already conducted extensive consultation on the PJC\u2019s proposals in the first half of 2015. The Government will continue to consult on remaining elements of the PJC\u2019s proposals\u201d.<\/p>\n

Anderson said while this was good news for people seeking greater clarity the timeframes were still problematic with both the PJC report and the FSI response pointing to a 2019 end date for these changes \u2013 which is the same end date for the LIF transition.<\/p>\n

Once again the FSI Response highlights the amount of work facing advisers in the next few years: \u201cThe Government will introduce legislation to raise the professional standards of financial advisers by mid-2016,\u201d it stated under Recommendation 25.<\/p>\n

\u201cA statutory review in 2019 will consider whether this new regulatory framework has raised the professional standards of financial advisers\u2013and whether further changes are required.\u201d<\/p>\n

Anderson says the industry is expecting a 2019 end date for the PJC and FSI changes but said past experience with the Future of Financial Advice (FOFA) regime showed how large-scale changes take time to build and introduce before implementation.<\/p>\n

\u201cThe start date depends on certainty and we don\u2019t have any documents about how any of this will be implemented \u2013 via legislation or regulation, or how various bodies will be set up,\u201d Anderson said.<\/p>\n

Adviser numbers a key issue<\/strong><\/p>\n

The other issue is the sheer number of advisers who would be required to upgrade their qualifications before 2019, once final details are released.<\/p>\n

According to financial services training provider, Deakin Prime, 75% of the 22,500 existing advisers do not have a relevant degree level qualification and are working off Regulatory Guide 146 qualifications, that is the Diploma of Financial Planning (DFP) or Advanced Diploma of Financial Planning.<\/p>\n

The other issue is the sheer number of advisers who would be required to upgrade their qualifications before 2019, once final details are released.<\/h6>\n

Anderson said while many of the larger planning groups were working to have all their advisers holding a professional designation, such as the Certified Financial Planner or Fellow Chartered Financial Practitioner, by 2019 it was not reasonable to expect all advisers to become degree qualified.<\/p>\n

\u201cThere may be a need to grandfather some across because it would be completely impractical to expect all advisers to reach degree level, no matter how long the transition period may be,\u201d Anderson said.<\/p>\n

\u201cThe PJC and FSI focused on new advisers but a key issue is when will someone be no longer considered as a \u2018new adviser\u2019 and what window will those who have started their DFP or Advanced DFP have to finish it before the new rules start?\u201d<\/p>\n

\u201cThe universities offering courses at degree level also don\u2019t have the throughput for this many people so there will need to be more courses or some other bridging arrangements.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"

Advisers preparing for the introduction of the Life Insurance Framework (LIF) are likely to be hit with a second round of changes over the next three years as new education standards are implemented.<\/p>\n","protected":false},"author":3,"featured_media":31525,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8],"tags":[4247],"class_list":["post-31507","post","type-post","status-publish","format-standard","has-post-thumbnail","category-compliance-regulation","tag-feature"],"_links":{"self":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/31507","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/comments?post=31507"}],"version-history":[{"count":0,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/posts\/31507\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media\/31525"}],"wp:attachment":[{"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/media?parent=31507"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/categories?post=31507"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/riskinfo.com.au\/news\/wp-json\/wp\/v2\/tags?post=31507"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}