Michael Aitken, CEO of the Capital Markets Cooperative Research Centre (CMCRC), said there was little evidence a national exam would deter unethical individuals from practising.
“Personally I doubt whether the ability to pass an exam is going to have any impact on integrity-challenged individuals other than clearly telling them where the line they are not to cross actually is,” he said in a statement.
“I rather think such individuals are likely to ace such tests and provide investors with a false sense of security.”
He suggested ASIC chairman Greg Medcraft was “driven by passion” rather than an evidence-based process when formulating the proposal.
“They [ASIC] cannot be permitted to authorise a change to market structure based on regulatory fervor or fiat, which appears to be the main motivation for the proposed national exam,” he said.
In particular, he criticised ASIC for failing to define the terms ‘fair’ and ‘efficient’ and for failing to develop an operational measure for these terms, which he said was required by the regulator’s mandate.
He also called for ASIC to evaluate whether exams in other jurisdictions – like the United States’ series 7 exam – were effective in reducing fraud and mis-selling.
“The proposed national examination will have costs which will no doubt be passed onto clients, and it needs to be evaluated in light of the desired outcome,” he said.
The simple truth is that whenever there is potential for a conflict of interest and for someone to act in their own interest, there will be rogues. There are rogues in every industry and profession.
No amount of examination (or educational standards) will prevent people being scammed!
While ever Investment Advisers resist being professional they will not be judged as professional. in my lifetime, to obtain a licence, I was required to submit a certified copy of my qualification,certified evidence of Professional Indemnity insurance, Public Risk Insurance,a clean unblemished record,If I couldn’t then I was refused a licence to practice,and refused insurance. Booted out of the industry.
BLAH (16)…yes they do, they are subject to the same CPD requirements as yourself and would lose their licence and cease practice if they did not comply. and in most cases the need to submit a certified copy of their qualifications in order to obtain a licence which they cannot practice without.
I wonder what qualification our esteemed passionate ASIC commissioner lays claim to have. It is just as much an insult to state he needs an examination as it is to me and others who have done the hard yards, have degrees and have been practicing for years, completed by study the FPA or IFA highest qualification. Again, maybe he needs to ascertain the problem and talk to industry participants who just may enlighten him. Cut through the noise and politics and just be fair dinkim- a sound solution is easier to find without all the rhetoric.
Whats with ASIC death by a 1000 cuts approach to the financial advice industry. Lets have a ‘one size fits all’ approach says ASIC because the industry is so ” appalling”. Really ASIC, what about the advisers that are degree qualified or have multiple degrees and diplomas. Some of us are qualified lawyers and accountants but choose to be financial planners. I would interested in someone explaining how sitting a six hour exam (series 7)would in itself prevent bad advice or fraud. Fraud involves a deliberate intent and actions on behalf of the perpetrator. No exam will prevent that.
James does a “engineer, mechanic, carpenter, doctor, plumber” get a test every year? What a joke.
What a joke this industry is! What a JOKE!
Surely the 40+ CPD points I do each year, together with an annual licencee exam (to retain my LOA) and the actual practising of varied and in depth advice (as opposed to a sausage factory) mean my knowledge is up to date and not in question.
Any muppet can pass an exam, mutually exclusive to values, integrity, ethics, etc.
[quote name=”James”]If you don’t take the time to obtain professional qualifications then you are not a professional and don’t deserve to be employed as such.[/quote]
Explain that to the thousands of advisers who have been giving quality advice for 20 years plus WITHOUT a degree and WITHOUT any compliance issues.
I’m not saying this out of self interest. I have qualifications and this wouldn’t affect me. I’ve been in the industry for 17 years and I have come across a lot of “educated idiots”. I’ve also met many advisers without formal education who I would be more than happy to look after my financial planning needs.
The bottom line is that degrees and qualifications do not alone make good advisers.
This idea is nothing more than a tactic to cover the collective Medcraft-ASIC backside. This is what Medcraft does best, makes excuses to explain the abject failure of ASIC to appropriately regulate the insto wealth groups.
If you don’t take the time to obtain professional qualifications then you are not a professional and don’t deserve to be employed as such.
If ASIC started to treat financial advisers as professionals they might actually be surprised at the support they get in return. At the moment the level of disrespect is mutual. There is no incentive to obtain higher qualifications in this job, no recognition by ASIC. An adviser with 20 years experience and post grad qualifications still has to do a full SOA for a basic small investment, and now an FDS and an opt-in…and a national exam on top of CPD.
FoFA to deliver affordable advice to all Australians….oh please…I’m laughing so much it hurts.
Well what would you expect from a regulatory body but to try to solve an issue with more regulation. An exam cannot weed out shonky planners. More education ie CFP does not mean a planner with such qualification is not shonky ! In fact it gives such operators more cover under the assumption of being a qualified adviser. Higher education & standards is important but if an adviser cannot communicate his message to a potential client, he/she will just be a well educated planner with no clients ! ASIC is there to be the watch dog & to deal with fraud, however the current government has cut their funding. ASIC see this exam as a cheap way of dealing with a much more complex issue. Now for those like me studying their Masters FP… IS THIS STILL the best education path to take, or will passing this exam mean that I am fully qualified at the highest level ???
Aitken is right. The ‘rogues’ will ace the test, much like the movie ‘catch me if you can’. I have met a few of them and they are very intelligent. But they have not spent the time properly reading the research and evidence from which to formulate their strategies. They fly in and out of our profession leaving a wake of devastation, largely because they have nothing to lose. They haven’t properly invested time or money into a proper education. If Medcraft wasn’t so conflicted with his obvious bias towards industry funds he would introduce compulsory University qualifications for all financial planners. This would transform our profession and have a long-lasting positive effect on consumer protection.
ASIC knows it can’t weed out rogues – that should be our job!) but it CAN weed out the incompetent advisers, and that’s a start. If everyone passes then no problem. Cost? – We have plenty of bigger costs than what should be a simple test of competency. That issue is a Furphy. We can’t complain about ASIC doing too little and then complain when they act. They need MORE funding and our support.
“Lord Stockton”
Well said succinct short and factual, Exams do not stop Rogues in any Profession, ethically and morale Bankrupt individuals do not alter their Psyche by completing an Exam. Time to wake up ASIC and many others to the real world.
Sure having a piece of paper will not ensure the integrity of the holder,but at least it is a measure of his knowledge,and/or ability.
If I need an engineer,mechanic,carpenter,doctor,plumber, the first thing I do is look for someone qualified.If he/she is not qualified they don’t get the job,simple.
Same story for masters degrees being a minimum qualification which seems to be the trend now – Westpac/AMP.
If someone is morally bankrupt, no amount of testing will change that.
If the state has after thousands of years been unable to stop murder or theft with ever increasing laws & penalties, why does anyone think a ‘test’ will stop a shyster?
A short cut method for ASIC to be seen doing something to cover past failures. New entrants- professional year and subsequent exam- no issues. The rest of us with FPA, CPA, ICA, IFA credentials–just to satisfy an ASIC passion??? Just shows a total lack of understanding of what the problem and solution might be. As usual, foot in mouth disease before engaging intelligence. happy to go ahead if ALL professions get the same treatment- doctors-accountants-solicitors ete etc.
Finally an academic with some common sense…very nice