Taking to LinkedIn, researcher and speaker Dr Katherine Hunt has questioned why there are no standards for financial advice that are built by the profession, followed by the profession, talked about to clients, enforced by peer-assessment, and monitored by the regulator.
“And no, it’s not *XYZ’s fault,” Dr Hunt wrote, alluding to the government, ASIC, AFCA, licensees, and personal indemnity insurers.
“It’s not one’s fault,” she noted, adding, “that doesn’t mean it’s strange they don’t exist”.
“Building standards exist. Accounting standards exist. And surely those two professions are at least similarly complicated to financial advice.”
Dr Hunt ultimately opined that “it’s time for the financial planning profession to build their own standards”.
“Australian standards. By the profession, for the profession.”
Speaking to ifa, Dr Hunt explained that one of the cornerstones of a profession is “practitioner-developed standards” on every key process that the profession does.
“The practitioner-developed standards are then provided to the licensing body, the regulator, and every licensed practitioner.
“But the key is that the standards are developed by practitioners. Regulation still has a role — that’s the bare minimum level. But no builder would say, ‘Well, what I did is not technically illegal’. Instead they would say, ‘What I did was to standard — here are the publicly available standards and you can see that is true’.”
Noting that “standards are above the law”, Dr Hunt added that “keeping each other accountable” is key.
The self-regulation of advice has previously been raised by former shadow assistant treasurer and shadow minister for financial services, Stuart Robert, who opined that the profession is now at a point where it is “well and truly” able to stand alongside other professions.
“The profession should be allowed to manage its own educational standards without recourse to government. That would be particularly helpful.”
He also shared in March this year that the opposition would support the new Financial Advice Association Australia, which is the group formed after the merger of the Financial Planning Association and the Association of Financial Advisers, to act as a quasi-regulator and oversee education standards, including to discipline members for poor ethics.
Mr Robert suggested that this approach would bring financial advice regulation in line with the legal profession, where state-based law societies regulate professionals in their jurisdiction.
The accounting bodies (ie) CPA and CA have developed the standards used by accountants over the years with a fairly big oversight by the ATO. The FAAA (hope I got this correct) aren’t sure if they are acting for advisers or large super funds / insurers and therefore want a bet each way. ASIC, APRA, licensees and the previous government have simply stepped in and filled the void with complicated and impractical solutions that have resulted in over 13,000 of advisers leaving.
Fasea is exactly this. So over academics thinking they’re poinant when they’re really another outsider pig in the trough
Surely the building blocks for industry standards are already in place with CFP and the professional code & practice standards administered by FPA/FAAA?
As we all know, there are major flaws in this arrangement due to CFP grandfathering and the influence of product companies over FPA/FAAA. But if these two impediments to professionalism can be removed, the underlying standards work has already been done, and is ready to be adopted more widely as an industry standard.
Professionals are able to set their own remuneration arrangements between themselves and their clients, not be treated like doormats by Govt. Until the Annual Fee Renewal Consent forms are changed back to Opt-Out, as exists with all other professional advisers outside of this nation, Australian advisers are kidding themselves that they will ever be seen as “professional”.