The three main financial advice lobby groups have laid out their reactions to the new Financial Adviser Standards and Ethics Authority's (FASEA's) proposed exam guidance.
FASEA released its proposed guidance on the exam advisers will have to pass in order to practice under the new adviser education standards regime, outlining five key competency areas advisers will be assessed on.
The industry associations’ initial responses to the document are mixed, with the FPA saying the proposal is “reasonably in line” with what the association expected, the AFA cautioning the proposed exam risks being too difficult, and the AIOFP wary that while the subjects seem appropriate, the underlying details will be key.
FPA head of policy and government relations Ben Marshan said the proposed exam is not dissimilar from what the association would expect after its consultation with members earlier in the year.
“The proposal covers all the sections and areas we expect it to,” Mr Marshan said.
“It’s reasonably in line with the whitepaper we put together with members; it covers all the same areas and considerations, though not all of them at the same level.”
Mr Marshan added that the FPA has commenced its consultation with members regarding the FASEA proposal.
However, in response to a request for comment, AFA general manager of policy and professionalism Phil Anderson said the current proposal may lead to a sizable number of advisers departing the industry.
“We are still digesting the guidance but our initial view is that the FASEA proposal is positioned at a very difficult level and as a result, advisers will find the exam extremely challenging. This heightens our previously stated concern that it could lead to a mass exodus of experienced advisers from the financial advice profession,” he said.
“This would not only have a detrimental effect on those advisers, their staff and their businesses but also on the pool of mentors available for younger advisers, and on consumers, who would lose access to these highly experienced advisers and have fewer choices when it comes to engaging an adviser.
“We will consult with members as part of our upcoming roadshow and will make a submission to FASEA seeking a more pragmatic outcome.”
AIOFP executive director Peter Johnston said the exam should be designed by someone with client-facing adviser experience to guarantee the appropriateness of its content.
“We want to see a ‘coal face’ advice industry experienced expert setting the exam to ensure that only practical and relevant knowledge is examined. Prima facie the subject headings released seem appropriate but the devil will always be in the detail,” he said.
“We also wish to point out that product failure has caused the greatest harm to consumers over the past 12 years and advisers do not manage, regulate or approve them. We encourage the FASEA board to educate the politicians on this reality otherwise we will have highly educated advisers but products still failing.”