The year for raised adviser education & professional standards

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While 2014 was arguably a year of regulation and reform in financial planning, the Financial Planning Association of Australia (FPA) has coined 2015 as the year for higher education and professional standards.

Mark Rantall, CEO of the FPA, said that he believes the financial planning industry is in the eye of the perfect storm, noting that never before has there been a set of circumstances where the public, media and Government have all called on the industry to support greater education and professional standards.

“Last year saw our profession come under immense scrutiny. As we leave 2014 behind us and enter a new year we are reminded of why we come to work every day – to give quality financial advice. The bottom line is, consumers need and deserve the best financial advice possible – there can be no grey area. Most financial planners have adopted voluntarily higher education standards and have always given quality advice that has been in their client’s best interest.

“Unfortunately, there are a small few who have held onto the past, even when it does not serve the client. While advice practices and education standards remain low, inconsistent and patchy, there will always be inconsistencies in the quality levels of advice. That has to end.

“The spotlight this year is rightly on education and professional standards. The FPA welcomes this and we are pleased to see that the Financial System Inquiry, Senate Inquiry into the Performance of ASIC and most recently the PJC Inquiry have widely supported the measures we called for in the FPA 10 Point Plan.

In particular, the FPA stands by the following recommendations:

• A minimum degree qualification for financial planners
• An independent body to be the gatekeeper of minimum education standards and requirements.
• The FPEC to be controlled and funded by professional bodies approved by the Professional Standards Councils, which are required to establish codes of ethics which are compliant with the requirements of a Professional Standards Scheme and are approved by the Professional Standards Councils
• Ongoing professional development for financial planners
• Re-labelling the term ‘general advice’ to ‘product sales information’ and the term ‘personal advice’ replaced with ‘financial advice’
• The term ‘financial adviser’ and ‘financial planner’ to be enshrined in the Corporations Act, and only individuals registered as a financial adviser can use these titles.

“There has been a lot of media interest this month around the PJC report recommendation that financial advisers must pass a ‘registration exam’ to be listed on the ASIC national adviser register. We will be closely reviewing this recommendation to better understand the parameters and implications of this for existing advisers. Ultimately, we want to ensure there is no duplication. And at present, we believe that the need for a national competency exam is redundant once entry standards for financial planners are raised to a degree qualification.”

Looking ahead, Mr Rantall said 2015 will see the FPA focus on helping members navigate the new professional path set by FoFA, FSI and the PJC report. It will also be working with members to rebuild the reputation of the profession in the eyes of the consumer.

“We will be working with Government on fine tuning and ensuring sufficient transitional arrangements are put in place as recommendations for our profession are finalised.

“But it’s not just about looking inwards at our profession – ultimately we need to focus on consumers also. We all need to work together to show the benefit of quality financial advice and how to find a trusted and qualified financial adviser. Only then can we truly reach our goals of creating a better financial future for all Australians.”