According to Labor MP Stephen Jones, the time to recognise past experience in financial advice is well overdue.
Speaking at an event hosted by the Association of Independently Owned Financial Professionals (AIOFP), Jones once again denounced the Government’s handling of FASEA and the advice profession in general, pointing to the exodus of around 11,000 advisers since 2018 as evidence of the “egregious injuries Scott Morrison has inflicted on [the advice] industry.” He added that the sharp decline in advisers precipitated an estimated 28% jump in fees, which “puts the cost of financial advice well beyond the reach of countless numbers of Australians.”
“These are startling figures that should cause alarm for a Prime Minister that likes to pretend he’s all about giving a go to those who get a go,” Jones continued, “but like so much that this Prime Minister does, it’s all slogan and no program.”
Unlike the LNP, Jones said, Labor “[recognises] the value financial planners have in our system” and will, if elected next year, “properly recognise [advisers’] experience” by no longer requiring advisers to undertake a bachelor’s degree if they have 10 or more years’ experience and a “good record” under their belt.
“To be clear,” he noted, “we are in no way scrapping the professional standards reforms. We will still expect advisers to pass their professional exams, and meet continuing professional development requirements, and abide by an appropriate professional code of ethics. But we won’t be asking you to waste your time on degrees you don’t need.”
As a campaign promise, Jones’ comments will undoubtedly be compelling for those advisers who have long held that FASEA swayed too far from the intent and wording contained in the explanatory memorandum accompanying the original Corporations Amendment (Professional Standards of Financial Advisers) Bill. They also reflect the extent to which professional standards have become something of a political battleground now that the overseeing Minister has the authority to make significant changes to the existing legislation under the new post-FASEA structure.
And ultimately, it’s difficult to argue with the numbers. Whether or not one chooses to hold FASEA individually responsible, a near-40% drop in the number of advisers since its introduction paints a pretty clear picture.
The open question is: would what Jones is proposing make a significant difference at this stage? Or is it too little, too late?
At around the same time Jones gave his speech, FASEA announced that 82% of active advisers on ASIC’s register have passed the exam – although the most recent round of exams, held in November, saw the lowest pass rate on record (52%). Particular areas of underperformance were (again) practical applications of the Code of Ethics and how Chapter 7 of the Corporations Act applies to the provision of SOAs/ROAs and client case studies – an area of financial services law that is currently under heavy review by the Australian Law Reform Commission (ALRC), which described it as “the most complex on the Commonwealth statute book.”
That so much here (including the Code of Ethics, Chapter 7 and the future of FASEA or its post-Better Advice equivalent) remains up in the air is likely destabilising even for those advisers with FASEA-approved qualifications.
Proper recognition of professional experience – should it happen – is a good start, but there’s a lot more work to be done in 2022.
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