Ten-point plan to legislate “adviser” unveiled

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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:

1. Raising the minimum criteria so that the term financial planner/adviser is restricted under the Corporations Act and the individual must:
a. Have membership of an ASIC approved professional body; and
b. Hold minimum education standards of a relevant university degree, and three years’ experience over a 5 year period; and
c. Maintain minimum continuing professional development of 90 CPD points over a triennium.

2. 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.

3. 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.

4. The term “Commission” to be defined and then banned under the General Advice exemption.

5. 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.

6. 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.

7. 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.

8. 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.

9. 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.

10. 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.
  • Steve on 27/05/2014 2:22:32 AM

    John the FPA has totally thought this through. You see a hefty fee or an expensive multi choice cliche course will fix everything. As long as the FPA has an earn, they are happy. It's all about making it as hard as possible for an adviser to exist so you cough up the fees.

  • John Cross on 26/05/2014 9:45:25 PM

    I agree with John Smithson and Mary Benton. As a CFP of 17 years and planning to "advise" for another 15 years, I don't think I need to join the kids at Uni to become a good adviser or to be called a planner.

  • The FPA is not needed on 23/05/2014 8:53:33 PM

    Funky goose, use a straw next time, less slurping sound that way.

  • POWER on 23/05/2014 5:30:48 PM

    I had to fight ASIC at the AAT. I won, but it cost me a year of my life, my reputation and $895,000 in legal fees with no recourse...and no apology.

  • John Smithson on 23/05/2014 2:21:09 PM

    Interesting concept as most of the CFPs would need to lose their status as they did not need a degree to become qualified. They could also not be called Financial Advisers even though they are CFPs. Not sure if the FPA has thought this through.

  • Mary Benton on 23/05/2014 11:24:09 AM

    Well I am a chartered accountant in both the UK and in Australia, and I hold many many post grad level qualifications, but I wasn't required to complete a 'relevant degree' as part of my pathway back in my uni days. I completed articles instead, then went on to post grad training. Does that mean I can't now retain my title of financial advisor? Get real FPA. Level the playing field. Come up with pathways that also allow for everyone to prove their capability through a series of post grad level training or exams please.

  • viewsxew on 23/05/2014 11:16:54 AM

    It seems that the process of moving the financial planning industry to a position of higher respect in the general community is going to find challengers from within the industry itself.

    Whilst I don't believe all of the 10 steps are going to be needed, the general principal has merit in my view.

    Obviously there is a long road to hoe here, but well done FPA for at least setting out some guidance as to a direction to make a start on the journey.

  • Steve on 23/05/2014 10:49:05 AM

    Agree fully that Dealer groups are not needed. GET RID OF THEM.
    Fully DISAGREE that a membership to a professional body is needed! WTF?? This is just a cash grab by the FPA along with its ridiculous ongoing points suggestion. The industry and asic needs to get off its behinds and simply monitor advice given - end of story. You cant educate morals. Advisers needing this type of mothering need to be kicked out. A good adviser has not and will not ever do the wrong thing. How about rewarding those that do the right thing by not loading them up with this ridiculous regime of compliance. Oh wait, that wouldnt feed the FPA's FAT SALARIES or profits would it. Funny how this comes shortly after they hire a new FAT CAT. Start helping your advisors FPA, stop hindering them.

  • PETER JOHNSTON on 23/05/2014 10:23:44 AM

    Allowing ASIC to have 'powers of suspicion' is very dangerous, what if they get it wrong? The adverse publicity will destroy the business regardless of the AAT outcome. SoPo must be a publicity stunt. Considering over 80% of the market are vertically integrated models specifically set up to sell their own products, how can you try and impose 'perfect market conditions' when the market is largely conflicted? Nice try but consumers are not silly.

  • James Howarth on 23/05/2014 9:51:17 AM

    I hope the direct licensing means an end to the flawed dealer group model.

    Dealer groups are not required.

  • James Howarth on 23/05/2014 9:49:55 AM

    The separation of product licensing and advice licensing is essential to good regulatory design .

    Doctors don't work for pharmaceutical companies.

    Good work fpa . Hope it doesn't take 20 years to achieve.

  • Matt on 23/05/2014 9:41:13 AM

    So what is changing? We already need to have specific qualifications to do our job, 30 points of education each year, and while not mandated yet we need to be associated with a professional body and have some practical experience behind to get a job in the industry.
    The rest just seems to be semantics really.

  • Funky Goose on 23/05/2014 9:36:43 AM

    Fully support this FPA initiative.

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