In accordance with the Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018, Australian financial advisers are required to complete a minimum of 40 hours of continuing professional development (CPD) a year.
Included in these 40 hours, advisers are required to complete at least five hours of technical competence, five hours of client care and practice, five hours of regulatory compliance and consumer protection, and nine hours of professionalism and ethics.
For many within the advice profession, the professionalism and ethics requirement has become a contentious issue. Speaking with ifa, Esther Althaus, managing director and financial adviser at Perspective Financial Services, said the requirements reinforce the idea that advisers require ongoing training in order to act ethically.
“It’s insulting, and when you look at other professionals and you see what financial advisers have gone through, and then are still required to do, it continues to plant a seed and to reinforce that advisers cannot be trusted, or can only be trusted if…,” Althaus said.
“I think that it’s doing the public a disservice, number one, and it’s doing advisers a disservice.”
A large portion of advisers’ complaints stem from the fact that they are required to complete nine hours of ethics CPD while other professions have significantly lower requirements, such as lawyers with only one hour a year, or accounts with six hours every three years.
“When you have professions, different professions, who have such a vast discrepancy of how many points they’re all required to do, it plants a seed to the public that we cannot be trusted in the same way,” Althaus said.
“We cannot be trusted the same way as lawyers, because we’ve got to do nine times as much ethics every single year. We can’t be trusted as much as, I don’t know, accountants, engineers, whatever other professions are required to have ethics.
“It sets us apart and sends a message already to the public that we can’t be trusted in the same way. And everything that we’ve gone through in the last several years, the additional studies, which now might be redundant if you’ve been practising for 10 years, the exam, all those bits and pieces, that’s brought us, supposedly, to an even playing field with other professionals.”
Another key complaint is that many CPD activities, while they may provide an hour of CPD, for example, only part of that may go towards the ethics requirement, meaning they end up doing more hours than necessary as they work towards meeting the requirements.
“I’ve done 90 points this year, but I still haven’t satisfied my CPD requirement, so now I’ve got to, what, take off a day, or spend two hours every day for a little while, just to tick the boxes?” Althaus said.
Appearing on an episode of the ifa Show last month, Helen Baker, financial adviser and owner of On Your Own Two Feet, shared a similar sentiment, arguing that the CPD requirements for advisers are “quite rigid”, leading advisers to spend an excessive amount of time meeting said requirements.
“Obviously, we don’t want to be doing it to a point where we become incompetent, but I think advisers kind of know where they need to get their professional development hours up and learn,” Baker said.
“I know one year I ended up doing like 70 hours of professional development because it wasn’t under that particular category or it crossed over, only part of it was on that category. So, you’re doing bundles and bundles of hours on certain things that are not there.”
A major income stream for the FAAA is selling CPD events, conferences and awarding CPD points on education programs. One event run by a competing association could be 1 FAAA points and be 10 from say the SMSFA. As licencee it’s also difficult to claim the training we provide as being recognised due to that conflict above.
I worked in an Accounting firm CPD consists of reading the paper and attending a NTAA one day seminar.
Given most Pollies and Bureaucrat’s come from Law and they make the rules this lawyers only do 10 hrs total CPD pa.
Including a huge 1 hr pa Ethics.
Canberra Pollies and Bureaucrats should
Be held to the same standards they impose on others.
Force them All to have Relevant degrees and back to Uni if they don’t.
Force them all to sit an exam to prove they are able to do their job, regardless of how long they have been doing it.
Force them all to do 40 hrs CPD pa with 9 hrs compulsory Ethics.
What’s good for others must be good for them.
If not ? Why not ?
I think most financial advisers would wholeheartedly agree with this. Yes, it is insulting to be required to continue to do 9 hours of ethic ‘training’ each and every year. Yes, I also agree that it denegrates advisers and makes consumers think we must all be unethical, as no other profession has anywhere near the same requirement. And yes, it’s a big waste of adviser’s time when they could actually be helping/advising clients or learning something useful which will actually help their clients. But, who has the authority and sense to see the nonsense in these requirements and actually change them?
If some advisers committed as much time to compliance as they do to complaining, it would be a very different industry. You don’t hear lawyers complaining about having to commit ten (10) hours of Continuing Legal Education each year to “Ethics and Professional Responsibility”; it’s simply seen as a core component of professional development.
Correction. Lawyers have to commit 10% of their CLE hours (not 10 hours) to Ethics and Professional Responsibility
Which is 1 hour a year
Well there is a lot to complain about. The regulation of this industry is a farce.
How is PWC going?
The 9 hours of ethics CPD was imposed by FASEA, an organisation that had Board members involved in the commercial supply of ethics courses. Thanks to the CPD requirement, those Board members continue to benefit financially long after the discredited FASEA was shut down.
It’s a great irony that the ridiculous amount of ethics CPD required by financial advisers resulted from a massive ethical failure within a government agency.
It is a total farce. A. It’s insulting, B. Gives the wrong impression to the public and C. It is SO hard to get enough ethics points through normal CPD provision. It should be scrapped, altogether.
There needs to be an ethics exam for TPD claims lawyers that charge $176,000 in fees for a TPD claim, that could be done by a life agent for less than $1,000. Post the Hayne (lawyer created recommendations), consumers are being skinned alive by them now.
That is just so wrong! $176,000 to a lawyer is criminal and this type of cowboy charging should be outlawed.