Finally fixing FASEA’s foolishness
It is a little more than five years since financial advisers were worried about the Financial Adviser Standards and Ethics Authority (FASEA) board having implemented the so-called 10-year rule with respect to degree qualifications.
The 10-year rule meant that degrees not completed within the most recent ten-year period would not be recognised under the FASEA regime – something which impacted a significant cohort of financial advisers, stockbrokers and others.
What needs to be understood about the Government’s release of the exposure draft legislation around the so-called “experience pathway” is that it also brings an end to anomalies such as the 10-year rule.
The other anomalous situation it addresses is the narrowness of FASEA approved degrees by providing a discretionary ministerial pathway to the recognition of a broader range of degrees for financial advisers.
The 10-year rule and the narrowness of the FASEA approved degrees regime represented two of the most egregious outcomes signed-off by the board of FASEA and it is worth noting that these mistakes were made despite warning voices in 2018, not least that of former financial planning academic, Adrian Raftery.
Indeed, Raftery was warning in February, 2018, that the 10-year rule was a mistake and it was not long before he was questioning the rationale behind the narrowness of FASEA-approved degrees.
And amid all the disagreement between financial advisers about the “experienced pathway”, stockbrokers are welcoming the Government’s exposure draft because of the way in which it addresses the failure of the FASEA regime to recognise many of the degree qualifications held by stockbrokers.
Stockbrokers and Investment Advisers Association (SIAA) chief executive, Judith Fox said the exposure draft was welcome “because the education qualifications of our experienced members have not been approved or recognised under the FASEA regime”.
“So, they were educated but deemed unqualified,” she said. “Importantly, stockbrokers and investment advisers have undertaken the ethics unit and we always supported that being undertaken.”.
Fox said that from the SIAA’s point of view, the exposure draft did not represent a watering down of education standards, but recognition of existing education qualifications.
The Financial Advice Association Australia has adopted a careful position on the exposure draft welcoming the consultation around its contents without committing to outcomes.
FAAA chief executive, Sarah Abood said the announcement gave much-needed clarity to those advisers who had been counting on it to continue advising clients beyond 2026.
“We believe that relevant experience is an important element to maintaining the required standard for professional, quality financial advice that will provide the best outcome for Australians. That said, we continue to feel strongly that there should be a time limit on the pathway such that a relatively young adviser does not continue to practice indefinitely without relevant qualifications.
“We have had a lot of engagement from members on the experience pathway proposal. We will be consulting with members intensively again on these detailed proposals in coming weeks, to finalise our submission.
“We are very pleased to see the proposals to increase the flexibility around approving relevant qualifications for new entrants. We have raised many instances where small course changes (in some cases as little as a unit name or number change) have led to qualifications being disallowed which do not fit the exact language of the relevant determination. This is extremely disheartening for students who have successfully completed these courses, and we are hopeful that more sensible flexibility will now be available.
“The FAAA will continue working closely with the government to help make financial advice more affordable and accessible to Australian consumers, as well as providing clarity and appropriate flexibility to financial advisers about their education requirements,” Abood said.
How can the FPA leadership be calling for a time limit on the “experience pathway”, when they have steadfastly refused to implement a time limit for grandfathered CFPs? What a bunch of weaselly hypocrites!
Get your own house in order first FPA, and put a time limit on grandfathered CFPs.
I’m not sure too much of FASEA’s foolishness really has been fixed. My understanding of the draft legislation is that ministerial discretion only applies to a narrow range of degrees for new entrants. It doesn’t properly fix the much bigger problem of FASEA’s refusal to recognise a wide range of degrees and other postgraduate level courses completed by experienced advisers, that complied with the intent of the original legislation.
The experience pathway is a clunky workaround to that problem, which unfortunately lets through some undereducated advisers who probably shouldn’t, and fails to fix the problem of unrecognised qualifications for experienced advisers who don’t meet the experience pathway criteria.
Nonetheless it is a welcome solution for those highly educated advisers with more than 10 years experience prior to 2021, who were unfairly penalised by FASEA. It is also good to see no sunset clause has been placed on it, which would effectively put an expiry date on their qualifications akin to the original FASEA mistake highlighted by Adrian Raftery.
This is only the tip of the iceberg for FARSEA’s failings, std 3 stands out as the most egregious. It is interesting to note that this was started by a lawyer (Hayne) and that we are required to not act if there is a conflict rather than disclose and professionally manage the conflict. This is at LEAST as much of a problem for lawyer when dealing with their clients. It takes a special kind of ignorance and hubris to make these judgments on others without first looking inside your own house. The legacy of Hayne is not dead yet, please can we kill it soon? The current regs are farcical and technically impossible to comply with in all client situations.
“The 10-year rule and the narrowness of the FASEA approved degrees regime represented two of the most egregious outcomes signed-off by the board of FASEA”
Lets call it what it is – corruption, with a splash of incompetence. Academics trying to stream people into their own university courses and adding their own publications to the reading list of courses! Ironic that they were sitting on an ethics committee. Then the corporate regulator paying for submissions (from academics) that suit their agenda, and giving funding to consumer groups for their submission for essentially the same reason. Either this was designed to rid advisers from industry or their level of incompetence was out of this world.
you missed out on the FPA that stood to gain via there FPEC approved courses. Too many saw it as a gravy train. Those academics in FASEA are now out acting as consultants for a range of other Uni’s
Some of us just got on and did it…even though they had qualifications. Let’s look at our industry. Over regulated, Australians can’t afford advice and over the next 10 years the average adviser wanting to work with middle to upper Australians will be wiped out by Super funds. Disgusting outcome contributed to many in this industry that are more focused on themselves.