Academics slam ASIC adviser exam
ASIC’s proposal of a national test for advisers is unlikely to weed out rogues from the industry, a financial markets think tank has warned.
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.
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