Govt urged to excise and speed up FASEA exam legislation

It is vital that the Government ensures the passage of the legislation supporting the extension of the Financial Adviser Standards and Ethics Authority (FASEA) exam extension and the Adviser Single Disciplinary Authority before the end of the year.

And to achieve this, the Government should excise to the two elements from the remainder of the Better Advice legislation.

That is the assessment of the Stockbrokers and Financial Advisers Association (SAFAA) which has expressed serious concern at the risk that the FASEA examine extension and the single disciplinary body will be delayed well into next year as the Government seeks to work through the other complexities of the legislation.

In a submission filed with the Treasury, the SAFAA pointed to the provisions relating to the tax (financial) advisers provisions noting that they are complex and confusing and at risk of becoming bogged down.

“We consider that the provisions implementing the Single Disciplinary Body and extending the cut-off time for the exam are too important to be held up while the government finalises the provisions concerning tax (financial) advisers,” the submission said.

“SAFAA recommends that the Bill and the regulations and legislative instrument be amended to excise those parts dealing with tax (financial) advisers and that stand-alone legislation that deals with the relevant James review recommendations be developed separately,” it said.

The SAFAA said this would allow the government to satisfy its obligations to implement the Hayne Royal Commission recommendation to establish a single disciplinary body, while giving itself the additional time required to legislate for the James Review recommendations.

“We also recommend that the implementation date be delayed until 1 July 2022 in order to provide adequate time for industry to prepare for the Single Disciplinary Body, in light of the fact that the regulations and legislative instrument have not yet been finalised and the Bill is yet to pass,” the SAFAA said. “Starting the scheme on 1 January 2022 will pose challenges for financial advisers to be across the detail of the rules and processes of the Single Disciplinary Body.”

The SAFAA submission has made the following recommendations:

• The Panel should not consider any disciplinary action arising from a possible breach of Standards 3 or 6 of the Code of Ethics until it has been reviewed by Treasury in its role as the standard setter for the Code. This is because, as currently worded, elements of the Code are unworkable and conflict with the corporations law.
• Directions sanctions should be treated in the same way as ‘spent convictions’ in the criminal code and automatically removed from the FAR after a period of five years (taking into account that this is a change to the primary legislation).
• The questions in the FASEA exam must be reviewed and overhauled in a timely manner by people who understand the financial advice industry in general and the stockbroking and investment advice profession in particular to ensure that financial advisers sit an exam that is ‘fit for purpose’ in 2022 and it contains tailored and bespoke scenarios appropriate for stockbrokers and investment advisers.
• The implementation date of the Single Disciplinary Body should be delayed until 1 July 2022 in order to provide industry with adequate time to prepare for the scheme.
• The provisions in the Bill and the regulations dealing with the James Review recommendations concerning tax (financial) advisers should be excised and dealt with in a separate bill at a later time in order to ensure a solution is reached that addresses the many issues raised by SAFAA and other professional associations whose members are impacted by these changes.