In June, ifa reported that the FPA had made a submission requesting that a section of the professional standards draft be amended so that the standards-setting body is allowed to approve other assessments in place of the exam.
While the recommendation was considered, the amendment was not made, said FPA chief executive Dante De Gori.
“Part of the difficulty is not knowing what the exam is actually going to cover. That is the reason why we put [the recommendation] forward,” he told ifa yesterday.
“If there are advisers that have completed assessments that are equal to or greater than the exam, should there not be consideration to allow them to not have to sit the same exam?
“The [recommendation] was considered. It was part of the consultation process but it appears that the legislation does not allow for that, which means that everybody would be required to complete the exam.”
FPA chair Neil Kendall said he believes that the reason the recommendation was unsuccessful came down to “an issue of politics”.
“We have a very strong view that if you’ve done the CFP certification, which is at a master’s level, you shouldn’t need to do a lower level exam to prove your competence,” he told ifa.
“However, it became too messy and it simply just didn’t get through. We saw it as redundant, but unfortunately there were a lot of things muddying that water.”
Still, the exam should not be a huge concern, said FPA head of policy and government relations Ben Marshan.
“The legislation sets out that there will be an exam so it needs to cover everybody in that. So realistically, what that exam will most likely cover is compliance with the Corporations Act, which you do every day, and ethics,” he told delegates at the FPA Congress in Perth yesterday.
“We have certainly voiced our concern with the exam. But what was introduced yesterday says that the standards-setting body has to approve an exam. That exam doesn’t necessarily have to be distributed by the professional standards body.
“There could be more than one exam provider, so we have flexibility that we may be able to apply and help our members through the exam process with the standards setting body.”
Another recommendation that was unsuccessful was around requiring advisers to join professional associations, Mr Kendall said.
“But what will happen is that people will need to sign up to a code of practice, and that is huge in terms that it is going to be enforced,” he said.
“That will be a big change for a number of people.”
It sounds another dogs’ breakfast to me. The word “Prifession” seems to be superfluous when too many disagree on unity, ethics and education
Very correct title.
Just missing the part of “FPA politics ……”
Had the FPA provided a truly non political, non self interested contribution they might have been taken seriously but their submission was basically make the FPA the only body to provide an exam and the only body to provide an Association for AR’s.
Until the FPA works out what exactly it wants to be it will continue to be hopelessly conflicted and represent nothing but insto self interest.
FPA should be held wholly responsible for not explaining it properly that CFP is a universally recognition of the highest professional standard for financial planner. Holders of CFP still have to go for an examination to prove to meet the basic standard is absolutely an insult to the qualification. I reckon we should NOT be paying the CFP membership fee until it is proved to be officially recognised by the government.
I agree that the FPA should be held wholly responsible and members should not have to pay for the CFP designation it if it’s not recognised by the government. However the reason the government doesn’t recognise it is not through lack of understanding. The government understands all too well that many CFPs have never passed a comprehensive exam, and never completed a degree. Many CFP holders were given CFP status without ever meeting the sort of professional standards expected by the community at the time.
Rather than fixing this problem, the FPA has engaged in an ongoing campaign of denial and obfuscation to protect the fortunate recipients of an undeserved designation. The constant defence used, that “they met the rules at the time” is laughable. The rules at the time clearly lagged well behind community standards at the time. It was the 1990s, not the 1920s. Degrees and exams were commonplace in society and mandatory in all professions by then.
The whole problem could always have been easily fixed by the FPA rescinding CFP status from everyone who has never completed the CFP education requirements, then reinstating them when/if they do. But by refusing to even acknowledge the problem, let alone fix it, the FPA has given up credibility and relevance in the modern world of professional financial planning. This is why the government has had to step in instead.
I am still trying to ascertain the imperative for the exam. All of the issues, vertical integration, early release, SMSF property advice, commission miss-selling etc is ALL related greed, corporatisation of product advice and low/no ethics. I cannot recall a single example published by ASIC that suggested lack technical skill was an issue.
In fact when ASIC themselves audited STORM Financial they found they were compliant as they DISCLOSED all their fees, even though they were huge and on index funds. They made no comment on the fact that a 63 yo was borrowing 5 times their salary against their house in a double gearing “strategy” and wanted to retire in two years.
Can someone suggest any logic for the exam?
Murder has been illegal for 5,000 but it still happens. It’s the ethics and morals that matter more than anything else, especially given the complete lack of evidence an exam will fix anything except drive even greater cost into an already massively expensive advice industry.
I’m sure we all know a few fellow planners who have the technical knowledge of a potato. In my opinion, they drag the rest of the industry down… If this exam is done properly and becomes comparable to the BAR exam for law, I think it could help the industry.
I mostly agree on the storm side of things but many of the storm advisers used the defence “we use the same strategies for ourselves”… I struggle to see how a capable ‘professional’ could think double gearing into index funds is a good idea for anyone… Perhaps they would have failed the proposed exam and the industry would be a better place?
Thanks Reality, you made me laugh (potato comment) and yes you are right to some extent. But I have met accountants doing SMSF’s who did not understand superannuation interests exist and the impact on tax on pension vs accumulation accounts and lawyers who have asked me “do you have any further information on Testamentary Trusts”!!! They did their exams to no effect.
Also, most of the “potato’s” I know will be retired in 3-5 years so probably won’t do the exam anyway.
With 30-40% of my labour costs now on government red tape and compliance it’s only the consumer that will pay and a further distraction to actually getting on with running my business and caring for my clients.
The overhead burden is suffocating.
Yeah good point mate. I absolutely agree with you in the respect that many similar industries continue on their merry way… If I had a dollar for every time I needed to teach an Accountant about small business CGT/Retirement options I would be retired by now.
The one that really gets me is the property industry if you want to talk about conflicted remuneration and lack of governance! Being able to continually tell people to gear further into an asset that “only goes up” and receive 30 – 40k+ commission in the process is criminal. Not to mention many properties sold are priced higher to being with… Don’t see too many advisers selling shares or funds to clients 10% above market value!
Not surprising the govt was unwilling to exempt CFPs when so many CFPs were grandfathered in. Yet the FPA does nothing to fix this ridiculously hypocritical anomaly, and doesn’t provide any way for the govt or the public to distinguish between real CFPs and grandfathered CFPs.
Unfortunately the FPA has prioritised the interests of grandfathered CFPs over the interests of the rest of its membership.
We have many CFP’s, who were given CFP designation on completion of DFP8 or less, we can’t assume that all Advisers who are CFP’s have gone through the same rigorous education process. Legislation is set by politicians who do not understand how great practices and advisers operate their businesses & how we do not take the trust clients place in them for granted. I agree that we need to have a good framework in place & education standards are part of this framework, but all the qualifications in the world cannot replace experience, ethics and great advice. What compliance & legislation has done is increase the cost to serve immensely & gone along way against providing the ability for more Australians to seek advice.
You are so right, funny how they want to clean up the industry and make it a profession, but they are not prepared to draw a line in the sand and force the CFP’s who got the designation in a cereal box to earn it by completing the appropriate exams and assignments everyone else has to. I was a CFP overseas and have had to rewrite, so should they…
Couldn’t agree with this comment any more.
Compulsory membership of an organisation sounds like forced labour and thuggery. Talk about self interest!
As an industry surely we can’t allow a interest group to be the peak educator and lead guide on what the requirements should be for an adviser.
A designation is not the same as a qualification.
Education that need to be paid for and maintained through continual membership of an organisation is ridiculous.
Great to her this one was pushed aside too.
Another recommendation that was unsuccessful was around requiring advisers to join professional associations, Mr Kendall said.
The industry groups we have showed in the GFC that they wont speak on our behalf and have shown since they are heavily guided by their largest members, the very institutions dragging our PROFESSION into the muck.
Remove vertical integration and self interest and our Profession would be a mile ahead of where it is now…
Not surprising they are trying to protect their CFPs and therefore revenue. The actual CFP course is very difficult (and anyone who has completed it has my respect) but I am sure the FPA know many (not all) of the grandfathered CFPs would fail the proposed exam quite miserably.
I hope the focusses on financial planning knowledge and not just ethics… Its not difficult to answer ethical questions simply using common sense then do the opposite.. Its a lot harder to fake strategic financial planning knowledge.