The Financial Planning Association of Australia (FPA) has revealed its 10-point plan that aims to eliminate the risk of inappropriate people calling themselves advisers and sullying the name.
After months of hinting at a push towards legislating the term “financial adviser/planner”, the FPA has filed a FoFA white paper with the Senate Economics Committee which yesterday held hearings that will form part of the final FoFA report presented to senate on June 16.
A relevant and professional future for financial advice in Australia must uphold and adhere to the fundamental principle of preserving the best interest of Australian consumers, FPA CEO Mark Rantall said.
“The FPA banned its members from receiving commission payments on investment and superannuation products in 2009,” he said. “In 2014, in these last days of debate over the final form of FoFA, it is time to go to the next step on behalf of all Australians and the emerging profession of financial planning.”
The FPA’s 10-point plan includes:
Raising the minimum criteria so that the term financial planner/adviser is restricted under the Corporations Act and the individual must:
Have membership of an ASIC approved professional body; and
Hold minimum education standards of a relevant university degree, and three years’ experience over a 5 year period; and
Maintain minimum continuing professional development of 90 CPD points over a triennium.
Amend the law to develop criteria so that ASIC can approve professional bodies such as those prescribed in the Tax Agent Services Act or the approach proposed by the FSA in the UK.
The immediate establishment of a financial planner education working group (FPEWG) to develop a considered, strategic and holistic financial planner education framework. With the aim of lifting minimum education and experience standards to a relevant university degree and three years’ experience over a 5-year period.
The term “Commission” to be defined and then banned under the General Advice exemption.
General Advice should be re-termed 'general or product information' and be limited to the provision of 'factual information and/or explanations' relating to financial products.
The development and implementation of a co-regulatory design, which recognises and facilitates the role of ‘approved’ professional bodies in assisting ASIC to achieve its consumer protection and confidence mandates.
The establishment of a public register which is managed by ASIC, with a requirement for all financial planners/advisers (including employed representatives) who provide personal advice to be individually registered.
ASIC should have suspension powers for financial planners/advisers suspected of material and systemic breaches of the best interest duty. ASIC must have a justifiable position and the financial planner/adviser has the right of appeal to AAT.
Once the Federal Budget position has been improved, that the government commence consultation with industry to determine the benefit to have the preparation of an initial financial plan be expressly stated to be tax deductible.
A review into lifting the criteria of a sophisticated investor.
CEO Rantall told Wealth Professional
that by now everyone is familiar with FoFA, but SoPA - or the Separation of Product and Advice - is the one to watch.
He wants to see everyone, from the regulators, the legislators and the government, get behind the idea and support enshrining the financial advice profession into law.
“Anyone can call themselves a financial planner today – they could be selling property – and it’s just not where professional qualified financial planner are, and they deserve to have their title protected by law,” he said.