RG146 ‘effectively destroyed’ adviser education standards

The education standards inherent in RG146 “effectively destroyed” the higher standards which existed before their implementation more than 20 years ago.

That is the assessment of the Association of Securities and Derivatives Advisers of Australia which has used a submission to Treasury on Adviser Education Standards to lay bare the shortcomings of the RG146 regime.

“We agree that the standards set under RG146 did not deliver appropriate standards. We believe that the standards in RG146 degraded the educational requirements set by industry and self-regulated exchanges that were in place prior to the implementation of RG146. Examples of such standards (which were appropriate) are:

• SIA Graduate Diploma in Applied Finance and Investments
• SFE Registered Representative Certificate
• SDIA Accreditation
• FPA Certification

The submission said the pre-RG146 standards had followed the path of other professions which required post-graduate qualifications or accreditation by a recognised body.

“These standards followed the path of other professions which required post graduate qualifications or accreditation by a recognised body,” the ASDAA submission said.

“The RG146 standards effectively destroyed that framework and now more than 20 years later educational standards for financial advisers are still a topic for discussion as the current standards are not fit for purpose.”

“There needs to be a balance between appropriate educational standards which provide for a platform for New Entrants and Existing service providers to evidence that they have the skills and knowledge to provide financial advice and yet encourages young people to enter the industry and experienced service providers to stay in the industry to be mentors for the young,” the ASDAA submission said.

The submission said the association believed the Experience Adviser pathway was a step in the right direction but more could be done to grandfather and retain experienced advisers who had worked in the in the industry for over 20 years.

“Most of these experienced advisers have completed industry recognised post graduate courses and compulsory courses set by self- regulated exchange at the time. If an experienced adviser can demonstrate that they have completed the relevant studies and examinations required to be issued with a Proper Authority (prior to the AFS Licensing regime commenced) then they should have an avenue to seek exemption or be exempt from the National Exam and the Educational pathways,” he said.

“A pathway for Experienced Advisers should be available to all advisers in the financial services industry (regardless of whether or not they have been appointed on the Financial Adviser Register). One option worth considering is when an experienced adviser passes the National Exam (which is fit for purpose), then their experience and knowledge should be assessed to determine if they have met the Experienced Adviser criteria.”

“An adviser should have the choice as to when they wish to be registered and recognised as a financial adviser. Whether or not they have been registered on the Financial Adviser Register should not be a consideration. To suggest that an adviser that passes the National Exam and has many years’ experience is to be treated in the same manner as a New Entrant (ie. required to complete a Bachelor degree and a professional year, most likely supervised by someone with less experience than them) is insulting to the adviser and would act as a deterrent.”