The SMSF Professionals’ Association of Australia made its argument in a submission to the parliamentary joint committee inquiry into adviser education standards.
“[As] part of the professionalisation of financial advice, the [competencies] expected of advisers would be set and governed by advisers’ professional associations who would be held responsible for the task, as opposed to a government regulator,” the SPAA submission said.
“In turn, ASIC, as the relevant regulator of financial advice, would approve professional associations to be the arbiter of setting education and competency standards for their given profession,” it said.
“For instance, SPAA, being a specialist SMSF organisation would set SMSF advice education requirements and competencies if approved by ASIC to do so. This would embody a system of co-regulation,” the submission said.
SPAA went on to argue that ASIC’s current approach by setting a minimum standard of education “has not been successful” in ensuring advisers meet the requirements to “provide high quality financial advice”.
“RG 146 is not a flawed concept by itself as it simply outlines the minimum requirements expected by ASIC as a guide to advisers, licensees and education providers,” the submission from SPAA said.
“However, too often the industry (licensees and educators) have interpreted the minimum requirements to be all that is required to be regarded as competent,” it said.
“For instance, parts of the industry have interpreted the wording around Tier 1 advice in RG 146 to mean that once the basic competencies for tier 1 producers are met, an adviser is an expert in advising on the specific products for which they have met.”
Denis…Most of the supposed sandals involve high levels of selling product, right? Monitor the sales of product. I know in my dealer group that most the advisers who were touted as the worlds greatest are now banned or suspended. Not singled out early enough and most likely ignored by management because of the revenue they pulled in. Unusually large figures should prompt a “please explain” letter and a possible audit visit. Dealer groups are just to scared to upset advisers and have them jump ship. Instead they pick on the smaller advisers to bump up their ASIC supervision stats.
OK Gerry
That should work! How then is this whole adviser problem in such a mess? Does it mean we will then have better educated rogues? At what stage did this checking of SOAs once a year come in!
Seems there were many banks and institutions operating void of RG 146 with their flawed or faulty planning advice. Or was that just something of a right-off for the most vulnerable!
Ethics, probity, accountability and above all transparency were always left in abandonment
The solution could be quite simple.
Dealer groups and/or product providers produce monthly reports to ASIC on sales and product remuneration per adviser. Speeding ticket issued when sales/revenue is abnormal…it happens on the ASX all the time. That’s what I call effective monitoring, not this checking of SOAs once a year and issuing more rules about what to include.
Having ASIC permit or liaise with professional associations to monitor advisers educational requirements as i.e. SMSF lobby group SPAA , is absurd! This would undermine the autonomy of the entire regulatory body.
The problem is hardly just adviser education standards that caused the massive collapse of investment planning.
In some cases and even today, it remains a real problem of noncompliance of existing legislation and regulations.
Much if not most planning disaster/s were not specifically due to educational issues. To the contrary, many blunders were due blatant, sometimes construed lack of compliance standards!
These compliance mistakes could have even been planned by some acting outside the regulated safety rules! Enforcement of the financial compliance rules would be the most practical remedial answer and the most effective short term fix.
Financial planners need to be independen.
I consider that this has great merit considering ASIC already have provided ‘tacit’ approval to a number of non professional organisations to undertake adviser audits especially when a EU is in place. I agree with previous commentators that for Reviewers to do the job they may have to be members or accepted by the various professional bodies and this could be problematic but ASIC could easily state minimum requirements and each group add their special requirements. The most important issue would be that the outcomes of the adviser reviews be consistent across the industry and the follow-up and reporting be legislated so that Licencees could not have the final say on whether an Adviser needs to be reported to ASIC – the Reviewer would be bound to do this.
Mmmmm……I can feel another few courses being compulsory coming up. Expensive courses fix everything remember.
Just like every other profession…
Call me a conspiracy theorist but the Labor appointees, Kell & Medcraft, wouldn’t like that; and it would be blunting of the sword that ISA can wield if the ASIC powers are diminished… Not saying ASIC are controlled by ISA but all they had to do was get their Union mates to contact their Labor mates to put certain individuals with the same biased anti adviser view in charge of that organisation and it worked itself out… How long until these two can be moved on so we get people we can proactively work with?
This suggestion has merit, but, as always, the devil will be in the detail. If I advise on SMSFs, do I need to be a member of SPAA to gain accreditation, then have to belong to the FPA and/or the AFA to gain accreditation in other aspects of financial advice? Could become an expensive exercise!