According to correspondence received by the Association of Independently Owned Financial Professionals (AIOFP) at a Treasury meeting addressing the experience pathway, the government does not endorse the inclusion of the successful completion of a formal course of study in ethics as a requirement for the pathway.
When Financial Services Minister Stephen Jones first announced the pathway over a year ago, it was suggested that aside from 10 years of experience and a clean record, advisers could be required to complete an approved ethics course.
However, the government has confirmed that under its proposal the only requirements for compliance should be 10 years (cumulative) of experience providing advice between 1 January 2007 and 31 December 2021, and no disciplinary actions recorded on the Financial Advisers Register before 31 December 2021.
In September last year, ahead of the government’s eventual release of legislation for consultation, the then Financial Planning Association (FPA) — now the FAAA — asked the government for the experience pathway to require advisers to have membership in a professional association or completion of an approved ethics course by 1 January 2026.
At the time, the FPA suggested that 80 per cent of its members believed an ethics unit should be required.
In a second submission to the government, the FPA, along with a number of associations as part of the Joint Association Working Group (JAWG), expressed a similar view, emphasising that the completion of an ethics unit was crucial.
Reiterating this view, in its latest submission to the government, the FAAA has doubled down on the earlier advocacy of its predecessor bodies.
“A requirement to complete the Code of Ethics Graduate level subject would ensure that all practicing advisers have a shared understanding and body of knowledge of our legislated code,” said the chief executive of the FAAA, Sarah Abood, in a statement on Friday.
The FAAA has also once again called for the experience pathway to be exclusively targeted to older advisers, with the inclusion of a 10-year sunset clause.
“This would represent an appropriate transition for established, experienced financial advisers and planners with a clean compliance record. Otherwise, we will be in a position whereby planners currently in their thirties could continue to practice indefinitely with no further qualifications required,” Ms Abood said.
The experienced pathway proposal has divided the advice industry, with the FAAA’s most recent survey showing that 50.9 per cent of members are supportive of a pathway, while 49.1 per cent are opposed.
However, according to Ms Abood, the level of support would grow to 70 per cent if both the sunset clause and ethics unit changes were incorporated.
“Much of the opposition to this proposal has been focused around the fear that this change will undermine the perception of financial advice as a profession. Substantial changes have been made in recent years to professionalise financial advice, with a big impact on the many who have invested time and money in completing the additional qualifications required under FASEA,” Ms Abood said.
“Our message to members is that we are a profession, and your clients acknowledge this,” she noted.
According to ifa’s latest poll, as of Monday, 8 May, 51.5 per cent of readers disapprove of the experience pathway, while 46.6 per believe that it is what the industry needs.
Distinction between ‘experience’ and ‘relevant’ should be scrapped
Ms Abood and the FAAA are also opposed to the distinction between “experienced” and “relevant” on the Financial Advisers Register (FAR).
“It does us no service with consumers to create a two-tier system, using terminology that makes no sense to them. Many ‘relevant’ providers are also experienced. Many ‘experienced’ providers will also have qualifications. These points were very strongly made to us by members during this consultation,” she explained.
“This is why we have also recommended that a distinction between ‘experienced’ and ‘relevant’ providers not be made on the FAR. It is time for us to come together as a profession and ensure consumers can have full confidence in their financial adviser who is registered and licensed to practice,” Ms Abood added.
She urged the government to finalise the proposal soon, to enable financial advisers to make decisions about which pathway they will pursue.
“We trust that this certainty will help many to make the decision to stay within this important profession.”
I did the ethics course and 3 other units to upgrade my qualifications to meet the new (soon to be watered down) standards. The Ethics course was the only one with new information I didn’t already know. Like many of you, I had ASSUMED it would be a waste of time, but was actually the only unit I learned anything from. I am ‘ethical’, but to understand the different thinking in this space was really educational, for life, not just financial planning. Anyone whining about this subject who hasn’t yet done it (which was me), I’d high recommend you do it. It was great to understand how clients, family, spouse, etc can all see something totally differently and yet not be ‘wrong’. Anyone with a growth mindset (which rules out >50% of IFA readers) would benefit from doing the Ethics course.
It should be mandatory to do ethics training annually so people like us can make more money from selling courses to more industries like yours!
I thought the FAAA was supposed to advocate for its members – not just waste our time & spending $. Bring ethical is about doing the right thing- spending $3500 and 150 -18) days on another course that will add 0.0% to any planner’s knowledge base is beyond me
Jonesy, please pay a refund to Advisers that were told they had to do this wasteful Ethics course and now are told that they wasted their time and money.
120 hrs of economic time wasted costs x charge out rate = $$$
$1600 for the course costs.
Let’s call it $40K wasted time costs.
Thanks Jonesy await my payment.
I’m still waiting for someone to explain to me how it is “ethical” that super funds can charge their fund members ongoing “intrafund advice” fees, without obtaining annual renewal consent, due to their ongoing nature. And overall, most members are being charged this ongoing fee without ever receiving advice. See a relevant IFA article at this link: https://www.ifa.com.au/editorial/27361-why-am-i-paying-a-fee-for-no-service
A contrarian view.
Instead of trying to reset the government policy, perhaps this is an opportunity to reset the FAAA and create relevance by making a statement and a bold move that would set the FAAA and its members away from the rest in the industry and truly create a professional body.
The current proposal just dilutes the standard that many FASEA qualified advisers have been striving for. It means that the industry will be measured by the lower standard.
This is a chance for the FAAA to be a policy setter rather than a policy taker.
Forget what the government is advocating.
Just set the membership at FAAA education standard only and for those that are on the pathway of meeting the FASEA education standards.
That way the FAAA will be a genuine Professional body that will set itself irrespective of what gets through by the government.
Yes this would create a two tier system, but at least this will be distinguishable for the consumer and the regulator.
The loss of members would be less than 20%.
This also would give relevance back to the CFP.
The question that needs to be asked is, how many non degree CFPs will there be if the experience pathway gets through?
In other words what changes?
As an adviser with over ten years experience and a clean compliance record, where do I seek reimbursement for the obvious waste of time, effort and resources I put into further studies?
I was already financial planning approved degree qualified. On top of this I held CFP and ongoing studies but was deemed to need an ethics course with the sole reason being “everyone must do it.”
95% of the industry objected to the stupidity of the previous arrangements. Now an about face – after the horse has bolted.
This is a farce!
To be honest I don’t really care anymore how we are regulated. It’s clearly all a joke to the politicians and regulators who have no idea what we actually do. Having recently recruited an ex-government staffer we are seeing first hand how bad our industry is. The ex-public servant cannot fathom how over regulated we are compared to her previous role.
All I want is some consistency.
Stop changing the rules!
FPAAA and FPA has never really represented Advisers. Half of our red tape nightmare is because they agreed in the past with which ever Government or minister proposal was put forward.
Being ethical in our industry is very important. But having to complete an expensive masters unit on ethics, along with 9 ethics points/hours in CPD each year isn’t going to suddenly make someone ethical (if they’re not)… Ethics are learnt through your life, and life experiences. Most long standing advisers without any compliance issues or complaints, really do not need to study ‘ethics’ to the extent currently required.
“A requirement to complete the Code of Ethics Graduate level subject would ensure that all practicing advisers have a shared understanding and body of knowledge of our legislated code,”
So what was the FASEA exam then? I must have been dreaming about sitting an exam which pairs the FASEA standards against legislation and client interaction.
Not sure why they (FAAA) want to push this.
Maybe the staff at the FPA/FAAA who have taken my premiums for 36 years and are coming out with a comment that advisers should pay a membership fee or pay to complete an ethics course should do the ethics course themselves. Sounds like an extortion proposal on advisers to cough up membership fees.. I have copied a section from the article above. “Financial Planning Association (FPA) — now the FAAA — asked the government for the experience pathway to require advisers to have membership in a professional association or completion of an approved ethics course by 1 January 2026.
Gosh the FPA/FAAA have really lost their way. Rather than mandating code training, they should be advocating changes to the code so it isn’t so bloody complicated with grey areas open differing interpretations. We also urgently need changes so dealer groups stop enforcing the code. They are dreaming up interpretations which are well beyond what FASE had in mind, which is causing mayhem. FASEA did not design the code with dealer groups in mind so they need to be removed from it altogether.
I learnt nothing that I did not already know about ethics. I have a Masters. It was a 100% waste of time. Instead, I would have liked the subjects to dive deeper into estate planning and aged care.
100% correct. What advisers need is more real-life tech workshops, not Uni units that are out of date in no time.
I’ll happily sit a nonsensical waste of time ethics course when it becomes a requirement for every single politician, ASIC employee and contractor, accountant, lawyer, real estate agent and car salesman to sit the very same course.
The 10 year rule should be moved to 01/01/2026. This will allow all the advisers a chance at meeting the criteria. Cutting off in 2021 is asinine. I have a related degree and I have no interested in going back to university. I do 9 hours a year in ethics already, I passed the FASEA exam which is mostly ethics. I am not interested in doing more ethics.
It is amazing that the Australian Labor Party government are doing all they can to wipe out any education standards in the finance industry. They are a disgrace.
As advisers and more so as people, you’re either ethical or not. The completion of an ethics subject won’t make a dodgy adviser ethical! Likewise, practicing ethical advisers don’t need to complete an ethics subject to continue doing what they are doing, ie doing the best thing by their clients! Ethics is taught in life, not at some institution for a fee!
There is no shortage of Accountants who completed an “Ethics” Unit at University, only to end up in jail regardless. If an adviser is “unethical”, AFCA or ASIC usually sorts them out. Funny how the sun is supposed to set on experience, but not on certain “favoured” University Units.
At last! Somebody said it. Amen.