The Australian Securities and Investments Commission (ASIC) yesterday released Consultation Paper 215: Assessment and approval of training courses for financial product advisers: Update to RG 146 (CP215) in which it proposed to scrap the current training register.
Under a new class order, to take effect from April next year, registered training organisations (RTOs) and self-accrediting organisations (SAOs) would self-assess their own courses as authorised assessors.
RTOs, SAOs and industry bodies accredited by ASIC would also be able assess courses delivered by other training course providers.
Explaining the proposal, ASIC said it was time that ASIC stepped back from the role of approving training courses in relation to financial product advice.
The register is not adding the value or quality assurance it was perceived to add, with ASIC admitting its assessment of courses and assessors was based entirely on documentation submitted, with no auditing or site visits conducted at all.
While the training register would no longer be maintained, thus removing a layer of administrative burden from RTOs, an archived version accurate up to 24 September 2012 would be retained.
This means advisers who were assessed on or after 25 September 2012 will need to be assessed by licensees outside the scope of the training register to determine whether those advisers have met relevant training standards or been individually assessed by an authorised assessor as competent because they meet the training standards, ASIC stated.
Dr Mark Brimble, associate professor (finance) at Griffith University, told InvestorDaily the proposals mean there will be no independent third party assessing candidates or providing guidance to training providers as to whether a program is meeting guidelines, effectively creating a “buyer beware” market.
“It is a bit strange: there are not many professions out there where there is no third party, a professional body or regulator or combination of the two, that oversees or provides guidance or accredited education programs,” he said.
ASIC’s previous CP212 standards guidance outlined a plan to require all new entrants to financial planning to achieve the degree-equivalent Australian Qualifications Framework level 7 by 2019, while the earlier CP153 proposed a national external exam, which would override CP212 requirements under currently proposed guidance.
CP212 left doubts in major areas such as the volume of learning that would be required in certain subject areas, as well as the possible loophole whereby anyone able to pass the national exam could effectively circumvent the increased requirements, Dr Brimble said.
Given the content of the three consultation papers, the “variety of potential outcomes is quite extraordinary, especially given the rhetoric around it”, he said.
“Put together, it’s unclear how it will wash out, what will be the minimum level and volume of training required,” he added.
“Whether it ends up that it is a degree in financial planning [as a minimum requirement] or whether there’s no specific education requirements whatsoever are both potential outcomes of this, one of which may dramatically increase the standards of entry, the other, some would suggest, would undermine them.”
Minter Ellison financial services partner Richard Batten told InvestorDaily he saw the announcement as ASIC attempting to reposition itself from a space where arguably it should not have been in the first place, and there is potentially a greater risk from ASIC attempting to regulate in an area that is not its core competency.
"To that extent I have some sympathy with what [ASIC is] doing," he said.
With ASIC to continue to set the content of RG146, and having been doing little to police RTOs anyway, it is likely little in practice will change significantly, he said.
"I don’t actually think what’s being proposed is fundamentally changing anything," he said.
Mr Batten acknowledged there is a lack of faith in the system due to a perception that advisers can become RG146 accredited after completing a relatively short course, but added the training register was probably not the best way to address that.
"There is a view that training standards need to be raised, I think everyone agrees on that, but having approved RTO training courses I’m not convinced is the best solution," he said.
Rather this proposal from ASIC is about creating a recognition from the ground level up that ASIC is not spending its resources on monitoring training and education providers and can spend its resources on more focused tasks - which "might be a good thing," Mr Batten said.
Submissions to CP215 close on September 30.
