The FSC first called for the establishment of the Advice Competency Standards Board (ACSB) in its second submission to David Murray’s Financial System Inquiry.
The concept has now been fully fleshed out in the FSC’s submission to the parliamentary joint committee’s inquiry into adviser ethics and education standards.
If established, the new standards board would take away ASIC’s current power to mandate education and competency standards for financial planners.
“We’re a bit ‘purist’ in that we think the people who enforce the law shouldn’t write it,” Mr Brogden said.
The FSC has already had conversations with the Association of Financial Advisers about the proposal and the association is “realistic about how far self-regulation can take this debate”, said an FSC spokesperson.
The Financial Planning Association (FPA), on the other hand, has been “non-responsive to date”, Mr Brogden acknowledged.
“I’m not critical of the [FPA’s Certified Financial Planner program]; I just think that in order to get the trust we need, people need to trust [planners] more than [is possible via] a professional body of financial advisers,” he said.
Discussing the submission in Sydney yesterday, FSC chief executive John Brogden acknowledged it was “somewhat self-effacing” for his organisation to be calling for yet more regulation.
“It’s a recognition that the level of trust is at an all-time low in financial advice,” he said.
“Recent events have rocked public confidence in financial advice, and we need to be zealots for better standards and better education,” Mr Brogden said.
The ACSB would be subject to ministerial appointments with representatives from industry association and regulatory bodies (such as ASIC and the Tax Practitioners Board).
“Self-regulation is no longer a credible option for establishing higher standards,” Mr Brogden said, adding that the creation of the new regulatory body would “obviously leave [the current financial planning education standard] RG 146 in the shade”.
The ACSB would be funded by the industry, with the FSC happy to reach into its pocket to finance the board.
“We’d be happy to fund it if there was a levy,” said Mr Brogden.
Instead of paying licensee/dealer fee splits, financial advisers can pay a levy to the board. How many accountants/lawyers and doctors pay their employer a licensee/dealer fee split??
This is the most ridiculous proposal I have ever seen. How many more regulators do we need in this industry to rip off planners for more fees to fund it. We are the most over-regulated profession in Australia so it is time everyone took a step back and realise that more regulation will never stop bad operators in any profession. If the govt followed the FPAs requirement for its members to be at least degree qualified etc. as per the media announcement yesterday then may be this would help to stop unqualified people giving advice. This is also not helped by the recent announcement that Ray White Real Estate have applied for a Financial Services licence. This is more conflicted than the vertical integration which exists with the big banks and other financial institutions. I have been a Planner for over 27 years and am disgusted with the attitude to the majority of planners who have always acted in the best interests of their clients but are now doing this with every incresing regulation.
Half-baked announcement which has all the appearance of being rushed, with something specific in mind no doubt.
Why is the FSC sweating?
Well done to the FPA for their prompt reply. (Chairman Matthew Rowe quoted “Fox in charge of the henhouse”).
Good article on this in today’s Sydney Morning Herald by Adele Ferguson.
A JOKE
The Financial Services Council in moving to sideline ASIC and the industry associations, with yet another advice standards board, this is not going to happen!
What can work is to FIX the mess created by those who work outside the legislation or ASIC guidelines!
It is not hard to identify where the problem or failure is, particularly at a planning stage or soon after. Perhaps, even with the existing quasi type regulator- ASIC it could be done on a random audit basis!
Not all perpetrators escape scrutiny, some even atone for their actions. ONLY SOME.
Clearly banks and corporates are not presently regulated, audited and of course this has resulted in massive transgressions ongoing!
FOS needs a FIX
How can you be serious! The institutions have been the ones that have put the independent planners and the advice industry in hot water because of their slack standards and conflicts of interest in the beginning. That is why we are paying prohibitive professional indemnity premiums.
Just what we need… more bureaucracy with an academic leading the way! As an ethical adviser with over 20 years experience – I am so over it. Those who break the law should be jailed or banned. APL’s should be abolished. Clients should be able to pay an advisers fees from any account or fund they like- it’s their money! The system we work in is full of hypocrisy and double standards from Licensees and Industry Funds who both want to control where the ‘money’ goes. The adviser and the client are the ‘meat’ in the sandwich, we didn’t create the system but we are sure paying for it. MAKE IT STOP!!!