In its submission to Treasury’s discussion paper on the matter, the FPA raised particular concerns over experience and education details, including the retrospective nature of a requirement for commercial law education which it said could squeeze planners out of the industry.
“The FPA is concerned about the retrospective application of the proposed commercial law course requirements,” the submission stated.
Financial planners do not provide advice on commercial law, so while many may have some prior learning, most planning education courses do not include commercial law topics to the level proposed by Treasury as a requirement for Tax Practitioners Board (TPB) registration, the FPA said.
“Imposing inappropriate education requirements on financial planners will create a significant and unreasonable burden, ‘squeeze out’ more relevant education as planners would not have the capacity to undertake additional training, and unnecessarily drive up the cost of advice for consumers, with little consumer protection benefits,” the FPA argued.
The FPA recommended the requirement should only apply prospectively.
The FPA also said there is a “mismatch” between the proposed ‘sufficient number’ and ‘supervising representative’ requirements for meeting Tax Agent Services education requirements.
This may have arisen partly due to the widely different structure of financial planning businesses compared to accounting businesses, according to the submission, which outlines the wide variety of business models current present in the advice industry.
“It is unclear as to the supervision requirements under TASA or whether the TPB will impose different supervision and monitoring requirements to those required of responsible mangers under the Corporations Act,” the FPA stated, and questioned whether a supervisor be required to be physically located in each financial planning practice.
The FPA also pointed to a disconnect between the proposed requirements and Australian Securities and Investments Commissions (ASIC’s) proposed changes to RG146 detailed in ASIC Consultation Paper 212. The TASA requirements go “far beyond” the tier 2 advice training standards outlined in RG146 and CP212, the FPA stated.
The FPA requested a clarification and suggested an approach consistent with RG146 be adopted.
There is a question mark over the new TASA regime’s compatibility with planners’ best interest duty under Future of Financial Advice changes, which the FPA said it is “extremely concerned about”.
Under the best interests obligations the individual planner is responsible and accountable for the advice they provide, but the FPA questioned what happened under TASA if the planner is registered under a licensee rather than individually, and if that would be sufficient or mean the planner is “not competent”.
“If the planner is supervised and monitored by the TPB registered company… how does the individual planner show competency for the purposes of the best interests obligations?” the FPA asked.
The FPA said the TPB should recognise licensees’ statutory registration and require financial planners who provide tax (financial) advice services to operate in a similar fashion to “monitored members”.
Treasury’s discussion paper is “silent” on the detailed expectations of relevant experience required for financial planners to register with the TPB, the FPA said.
“In this regard, the FPA recommends there needs to be different criteria for quantifying experience for existing planners versus experience for future planners.”
The association also recommended Treasury and the TPB undertake further consultation to determine the ‘relevant experience’ requirements for TPB registration for both existing and new planners.
