The Australian Securities and Investments Commission (ASIC) last month released CP212 which outlines a move to a degree or equivalent minimum for new advisers from 2019, but does not quantify how much learning is involved in those standards.
Perhaps more worryingly, it ties the new standards to a 2011 consultation paper, CP153, which proposed a national external exam for all advisers, saying those who can pass the exam “may” be exempt from new training requirements.
“It is important to note that if a national examination is implemented, it may replace any obligation to do a training course approved in writing for advisers of Tier 1 products,” CP212 stated.
“That is, Tier 1 advisers would be required to pass the national examination but what they do to equip themselves to pass the examination may be up to them.”
Dr Mark Brimble, associate professor (Finance) at Griffith University, told InvestorDaily that while moves to improve standards are, broadly, a positive thing, the major issue with CP212 is that there is no specification of the volume of learning relevant to the training required.
“That’s one of the major failings of the current RG146, as acknowledged in the paper: they had received feedback around CP153 that there was significant variation in the length of time it takes to complete the various education requirements offered by the various education providers at the moment,” Dr Brimble said.
“As we all know, you can get RG146 compliance by doing 2-3 weeks of training. The problem is, while this ups the level required to AQF [Australian Qualifications Framework] level 7, there’s still no specification of the volume of learning required to meet this.”
This creates the possibility that all the new requirements outlined could be done to level 7 in one or two courses, he said.
“That’s a significant issue in terms of the depth and breadth in which these issues are covered,” he added, especially when the depth of subjects which are difficult to cover other than within a full degree structure (such as behavioural finance) is considered.
“Without specifying the volume in addition to the level, there’s a significant concern over how it will be operationalised in an education environment,” he said.
“The last thing we’d want to do here is create a framework that allows a bachelor’s degree in business to incorporate one or two subjects on financial planning that touches on every concept laid out across the relevant areas in the document [to] then technically be compliant.”
Dr Brimble also said it is “alarming” that new entrants may be able to pass a three-hour exam with no particular formal study and become qualified.
“How would the skills component of this proposal, which is being substantially strengthened, be assessed under a CP153 national exam if there is no requirement to complete course of study built into those skills requirements,” he asked.
“I wouldn’t even know where to begin in terms of the concern that would raise relative to what we’re trying to achieve and what this document is trying to achieve in terms of education requirements, knowledge requirements and skills requirements.”
