The Financial Planning Association of Australia The Financial Planning Association of Australia

Band-aid solution: FPA replies to call for Board to oversee advice industry

The Financial Planning Association of Australia (FPA) has today rejected the Financial Services Council’s (FSC) call for a new statutory advice board to oversee the Australian financial advice industry, labelling it ‘another band-aid solution’.

The FSC yesterday called for the establishment of a new Board to control education and professional standards in the financial planning and advice profession. It has suggested its members fund this Board.

The FPA views this proposal as:

  1. Potentially embedding inherent conflicts, rather than eliminating them, given the proposed body is industry funded
  2. Asking Government to do the industry’s job of setting appropriate professional and educational standards (rather than establishing a regulatory framework and minimum standards and enforcing them)

Mark Rantall, CEO of the FPA said: “We see the FSC proposal as a band-aid solution that masks underlying, systemic issues. We don’t need a new Board to oversee the Australian financial advice industry. What we do need is long-term, effective change that is transparent.”

According to Mr Rantall, this call shifts the responsibility of regulation onto government and away from much-needed internal reform.

“This model gives up on self-regulation, but creates more red tape. Removing the self-responsibility of advice businesses to do their best by consumers is not a solution.

“The financial planning issues we face as a nation require long-term, systemic change. This industry reform effort will require significant work on the part of individual planners and the organisations that lead and manage them. It isn’t a job for government.

“We believe the role of Government and regulators’ is to set minimums standards and enforce them legally – it is not to do the industry’s job by defining what professionalism in advice looks like.”

The FPA has consistently called for significant industry change, campaigning for key measures such as:

  1. Unambiguous separation of product sales from professional personal advice. This means regulations must call product sales what they are i.e. “product sales” rather than General Advice (as per previous representations on the Future of Financial Advice reforms)
  2. Lifting educational standards so every new financial planner has a degree, as well as relevant post graduate qualifications and experience. An adequate standard is the internationally recognised CERTIFIED FINANCIAL PLANNER® designation. This is the globally recognised “gold standard” in contrast to the current, inadequate standard of RG146 – a qualification that takes less than two weeks to achieve. Existing financial planners should have to meet any competency standard gaps at an approved degree level.
  3. Enshrining the term ‘financial planner’ in law to ensure that Australian consumers can trust the financial planner they find when seeking financial advice.

“We have long called for higher education standards and strongly believe that these standards need to be set by a professional body and that there needs to be international independence around education and standards. We have that with the Financial Planning Standards Board. The FSC proposal ignores the fact that four of the five largest FSC members support the CFP® designation as the appropriate standard to aspire to.

“The blueprint for trust is simple: raise the bar in terms of professional and education standards for financial planners; separate product sales from professional personal financial advice and enshrine the term ‘financial planner’ in law so Australians can identify the professionals and trust the profession.

“The FPA supports planners to meet the highest possible standards, and requires that our members meet or exceed these standards to maintain their professional standing.”