In February, the Professional Standards of Financial Advisers Bill 2016 passed the Senate and mandated that all existing financial advisers must pass an exam by 2021 and have a minimum degree qualification, by 2024.
Speaking at the FPA Roadshow last Friday, chief executive Dante De Gori noted that while the new bill sets down a framework for professional standards requirements, advisers are demanding more details on how it will work.
Consequently, the FPA has released its own proposal to put to the newly-formed Financial Adviser Standards and Ethics Authority – a government elected policy team responsible for implementing the new education requirements.
The FPA has proposed a points system whereby 100 points means the adviser meets the new qualification requirement.
Individual units of study (individual subjects) that are offered within an overall qualification, certification or designation are each worth a certain amount of points, while CPD points will also count in achieving the 100 mark, the FPA has suggested.
For example, any qualification including or above a bachelor degree that is relevant to financial planning would easily meet the new professional standards requirements.
Lower level degrees such as an advanced diploma, associate degree, diploma or certificate would count for a certain number of points. CPD points should also go towards achieving the new “degree equivalent” standard, with some further units of study that might be required for advisers, the FPA said.
“We argue that experience needs to be considered, so we have included CPD as part of this 100 point framework. However CPD alone can’t take you to a ‘degree equivalent’ standard – but we’ve capped it. You’re required to keep seven years of CPD records and we’ve allocated two points per year of CPD meaning that it’s effectively capped at 14,” Mr De Gori said.
“The diploma and advanced diploma with CPD points would still fall short of 100 points meaning there would be further study needed,” Mr De Gori said.
“If this new body (FASEA) does agree with this concept in theory what we can do is work back with the education providers and see what courses or how many units of study you can complete in order to take it to 100 points.”
For the exam, the FPA proposed that the main areas of focus should be: compliance with Chapter 7 of the Corporations Act 2001, Tax Agent Services Act 2009, Anti-Money Laundering and Counter-Terrorism Financing Act 2006, common law fiduciary duties and ethics.
A significant majority of the 200-plus attendees who voted at the FPA Roadshow strongly agreed with the FPAs proposed plan, while about four per cent disagreed.
Mr De Gori said that with the support from advisers, licensees and other stakeholders, he is confident that FASEA would accept the concept with possible changes to the details.
I see one of the exam areas is common law fiduciary duties. Are Australian advisers really subject at law to fiduciary duties. If yes, where is that defined. If No, why would that be in the examination?
Contracts are covered under common law. As advisers we enter contracts with clients everyday. Therefore why should we be tested on it? Completing of a Commercial Law subject is also required to be a register Tax Agent (Financial) under the new system.
My question was about fiduciary duties – not contract law. They are not one and the same thing.
PS In your 3rd sentence, when you say “should” do you actually mean “should not”?
I have a Masters of Accounting and an MBA and did DFP 1 & 8, 15 years of practice with my own AFSL and I am a CFP. Am I a ‘real’ CFP?
I attended the FPA Roadshow and it was more like 700 attendees and not the 200 reported by the journalist. This is classic misreporting to defame the FPA!
I was there too Fred and it seemed much closer to 1000 than 200. The more important inaccuracy in the report however is to say that a majority of people agreed. While this was true for the 100 points proposal, the exam proposal did not give members any option to disagree. It was a forced choice between a range of bad options. The only avenue for people to voice any sort of disagreement was in the questions at the end. However when it became apparent lots of people had lots of questions the FPA was uncomfortable with, questions were quickly shut down. So much for listening to members’ concerns.
The Ongoing Fees Code was also discussed, but no feedback was requested on that. I expect the FPA already knows most members think it’s overly complex and bureaucratic, and only compounds the compliance burden rather than relieving it. A complete waste of time and members’ money.
“200-plus attendees who voted”
Surprise surprise, the FPA will charge a massive amount of money for each and every unit. They will milk this to the end.
What a massive con this whole circus they have created is.
Unbelievable! FPA, you should be hanging your heads in shame.
Agree with the FPA for once although that’s only if they force cereal box CFP’s to do the work too.
CPD shouldn’t be included, I did ’30 hours’ worth in 1 hour last week.
In fairness to the FPA, their points model allocates far fewer points to grandfathered CFPs then real CFPs. As it should. This is the first time I can remember the FPA actually acknowledging the huge difference between the two CFP pathways, rather than trying to sweep the issue under the carpet and hoping no-one would notice.
Good comment. BTW the “legacy” CFP holders did DFP 1 to 8.
Not really Jape, the original group were actually granted CFP status really just to get the FPA off the ground. It started from scratch with no members. After a few years CFP was given on the requirement of doing DFP 1-8. I’d really like to leave the FPA and so would you and all the other CFP knockers please start your own association.
Incorrect, an Accountant had to only complete DFP1 to be awarded CFP.
at least Jape, that’s a hell of a lot more credentials than a lot of other so called advisers out there. I can get share advice, super contribution advice and financial planning advice from my accountant in a fifteen minute tax return meeting and his only qualification is a Certificate in Business from TAFE, plus he’s an accountant so why would I want to see you.
I agree they shouldn’t be included. The best (and easiest) way to accumulate CPDs is by going along to regular Insto breakfasts or lunches.
The FPA’s 100 point proposal for education recognition is a good one. However they have completely failed in their approach to the exam. The FPA should be lobbying for an exemption from the exam for real CFPs.
Is a real CFP those who obtained by study not just out of a box of weeties?