Philip Kewin

The Association of Financial Advisers (AFA) welcomed the Financial Adviser Standards and Ethics Authority (FASEA)’s announcement yesterday, which outlines the degree requirement pathway that will apply to new entrants to the advice profession from January, 2019.

“We believe this is an eminently sensible announcement and, as outlined by the Chair Catherine Walter, is a positive beginning in providing certainty and direction for employers, education providers and of course those students aspiring to a career in financial advice,” said AFA CEO Philip Kewin.

Mr Kewin said ensuring the next generation of financial advisers is ready to meet the advice needs of consumers is an important first step in the program of work to operationalise the Professional Standards legislation.

“This is the first step necessary to provide certainty to those wishing to join the profession,” he said. “Of course the key task is providing clarity to existing advisers as soon as practicable.”

Mr Kewin said it seems clear by his comments that FASEA CEO Dr Deen Sanders is taking an informed and empathetic approach to developing  FASEA standards, and is conscious of the important implications for existing advisers.

“There is much at stake as we continue to build consumer trust in the financial advice profession through standards that recognise not only education but valuable skills and experience,” Mr Kewin said. “We look forward to the next steps and being part of the collaboration and engagement to help design these important standards for the financial advice profession.”

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The Minister for Revenue and Financial Services, Kelly O’Dwyer, announced Sanders’ appointment on Friday, saying he brought a deep understanding of educational and training standards required by financial advisors to the position.

SMSF Association CEO John Maroney says the peak body for the SMSF sector fully concurs with the Minister’s assessment of Sanders’ skills and knowledge, helping to ensure the new Authority fulfils its vital educational function.

“We are fully supportive of the Government’s decision to establish FASEA, recognising its important role to oversee the educational and training standards of financial advisors, as well as establish a Code of Ethics.

“It is another positive step to improve the training and educational standards of advisors, an issue the Association has long advocated.”Maroney says the SMSF Association will seek to work closely with the Authority to improve the professionalism of financial advice.

“From our perspective, higher standards of financial advice are critical to safeguard the interests of the more than 1.1 million SMSF trustees and members who have $674 billion in funds under management.

“A key message to the Authority will be to urge its recognition of SMSF specialists and their vital role in advising this sector.
“The evidence shows that SMSF trustees are increasingly looking to get specialist advice to assist in the management of their SMSF, so this advice needs to be of the highest order.”

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Commencing on 18 September 2017, Dr Sanders will lead the establishment of mandatory educational and training requirements, developing and setting an industry exam and creating a code of ethics that all financial planners will be required to adhere to.

Commenting on the appointment, Dante De Gori CFP® , CEO of the FPA, said, “Education continues to be top of mind for the financial planning community, ahead of the new education standards starting 1 January 2019.

“We congratulate FASEA on the appointment of Dr Deen Sanders as CEO. Deen has a great track record and is well known to the FPA as he was previously our Chief Professionalism Officer for six years. Deen’s ‘safe pair of hands’ will help guide the implementation of the new standards that will improve public trust and confidence in the financial planning profession.”

We look forward to working with Deen and his team at FASEA in preparation for the commencement of the new education and professional standards. Once introduced, they will provide assurance to consumers that their financial planner will be highly trained, experienced and subject to an enforceable code of ethics,” said Mr De Gori.

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The Financial Planning Association (FPA) has long expressed its concern that Australian consumers deserve better access and justice in compensation for poor financial advice and most importantly poor financial products.

The FPA has welcomed the St John report’s findings and has urged the Gillard Government to not lose sight of these vital consumer recommendations in the days following tonight’s federal Budget.

“The focus might be on Wayne Swan’s Budget surplus tonight, but all professional planners are cheering a massive ‘consumer surplus’ delivered by Richard St John this afternoon,” said FPA Chief Professional Officer Deen Sanders.

“This is a thorough review. Its conclusions are welcomed – including the need for careful redress of regulatory imbalances before considering any ‘last resort’ compensation scheme as a solution for retail client compensation.

“In other words, the report recognises that obligations on the licensed financial advice community have been ‘unbalanced’ in comparison to the light-handed regulatory approach of product issuers. FPA supports the call for a review of conduct and disclosure as well as compensation obligations of the product issuers,” Dr Sanders said.

FPA particularly endorses the comments made by Mr St John in his report, including acknowledging that:

• Getting this reform right is vitally important because there is a glaring need for the right form of compensation structure to exist to protect consumers from poor advice outcomes and poor financial products
• There are too many potentially inappropriate consequences from a last resort scheme that punishes those least likely to engage in inappropriate conduct and would still leave consumers deeply exposed unless the terms of the compensation fund are satisfied.
  There are worrying limitations of the existing PI Insurance arrangement that disadvantage consumers and advisers. 

The FPA supports the recommendations to:

• Review the regulatory environment for product issuers and expand access to compensation for consumers to product manufacturers and potentially other gatekeepers
• Strengthen the role of ASIC in oversighting compliance and the adequacy of insurance cover
• Support the FPA’s long held view that Financial Advice Licensees should be able to draw Product Issuers and other ‘at fault’ parties into compensation considerations on a ‘proportionate liability’ basis
• Dr Sanders noted the acknowledgements made by Richard St John in regard to the FPA’s strong involvement as the only professional advice body to provide a comprehensive submission and extensive follow-up to the review.

The report makes extensive reference to submissions made by the FPA, and acknowledges FPA’s support of the professional and ethical standards of its members.

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The consultation is open to all Higher Education providers and will run until 30 June.

Through the consultation exercise FPEC hopes to learn directly from the University community about their views on a new form of professional/academic relationship with this important financial services community, as well as to get a consensus view on the content and structure for a harmonised national curriculum in financial planning.

In recent years the importance of quality, timely and professional financial advice has been recognised by the Australian community, government and the financial planning profession, as integral to the growth of the superannuation system and to ensure the safe and financially confident position of individual Australians in the future.

The FPA has lead the way in the financial services industry and raised the bar on professionalism that saw it introduce degree requirements for its professional credential program, Certified Financial Planner (CFP®) in 2003 and in the intervening 9 years, 17 of Australia’s Higher Education providers have developed programs that align to professional recognition by the FPA.

In 2011, the FPA established an independent educational council called FPEC, made up equally of the Academic and Professional community, to review the existing programs on offer and research the needs of the University community.

Amongst the most significant concerns identified in that review were:

• The limited supply of specialist academic (Doctoral level) expertise in Financial Planning (and related Financial Services) presents a problem for the growth of dedicated teaching and research activity in a field that represents the single largest economic contribution to the country.
• A structural academic problem with professional ‘multi-disciplinary’ fields of research and teaching, leaving fields such as financial planning as academic ‘itinerants’ and creates a lack of ownership in traditional disciplinary structures.
• Anxiety amongst the Academy that technically dense and highly immediate fields of study, such as financial planning require a higher academic teaching/student ratio and greater academic immediacy than many other single disciplinary subjects.
• The multiple accreditation requirements of professional bodies and the increasing standards requirements of Australian education regulators lead to duplication of activity and ultimately drain academic support resources. Universities are calling for alignment in professional accreditation frameworks.
• A disconnect between the research activity central to University strategy and the research needs of the financial planning profession and related stakeholders (such as policy issues for government, structural and regulatory issues etc…)
• The increasing regulatory oversight and establishment of mandatory education requirements for professions such as financial planning has a narrowing and levelling effect on the educational content available and has eroded the traditional differences between VET sector and Higher Education. This has also led to difficulty in distinguishing between postgraduate and undergraduate program content and outcomes that seek to deliver the same regulatory outcomes, at the expense of differentiated professional and career needs.
• The Financial Services Industry has not provided a unified professional clarity around curriculum and professional needs across the varied sectors and has failed to support Universities with structured professional networks, leadership and funding.

In responding to these concerns of the University community and the need to ensure long term content and program integrity, FPEC has today launched a national consultation on the introduction of a new Australian Curriculum for Financial Planning and also a new Accreditation Framework for providers and programs.

Dr Deen Sanders, Chief Professional Officer of the FPA said:

“We know that Universities are working through enormous change right now, wrestling with changes to purpose, funding, standards and program validity. Our research showed us that the business world is wrestling with the same challenges, as the career model for professions changes in response to community demand, as individual professionals work through a different sense of community and obligation and as governments and regulatory scrutiny increases across the board.”

“In such an environment it is incumbent that professional communities reach out in a collaborative way to Universities to encourage and assist them to navigate the increasingly volatile aspects of modern business needs”.

In light of the 2011 review, the FPEC has expanded its work program for University engagement and will now also work on building a research channel and programs that support direct academic engagement with the professional community.

Prof. David Lamond, FPEC Chairman said:

“Until now there has been no consistent model of a financial planning curriculum and no consistent approach to accreditation. The Financial Planning Education Council’s proposal is for a consultation on the introduction of a new Australian Curriculum for Financial Planning that aims to support positive general outcomes for all graduates in this field, whilst allowing Universities to specialise in their area of research or teaching expertise.

Similarly, the competing variations in professional body accreditation presents complexity and unnecessary duplication for Universities so the proposal to adopt an Accreditation model that follows the Association to Advance Collegiate Schools of Business (AACSB) approach that many business schools are already following, is one that we hope the University community will support.”

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