Advisers should operate on the premise that the Senate is not guaranteed to pass the legislation necessary to extend the time-frames around the Financial Adviser Standards and Ethics Authority (FASEA) exam, according to Rob Lavery, manager of policy and technical services at wealthdigital.
While acknowledging that the Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume had announced the Government’s intention to legislate to extend the deadline, he suggested the passage of the legislation remain uncertain.
“After FASEA conducted the first round of exams, the Assistant Minister for Superannuation, Financial Services and Financial Technology, Jane Hume, announced planned extensions to both the deadline for existing advisers to pass the exam, as well as the deadline to meet the higher education requirements,” he said.
However, he suggested that in circumstances where the changes were not guaranteed passage through the Senate, advisers should stick to the original deadlines.
“The safest course of action for those who plan to continue in the industry long term is not to rely on last-minute study. Whether the deadlines are 2021 and 2024 or 2022 and 2026, both requirements will still need to be met so starting now allows advisers the maximum time to meet the new standards,” Lavery said.
He said he also believed there was limited clarity around superannuation and insurance advice policy.
“The last term of government saw multiple bodies recommend reforms to default superannuation fund selection and retirement income streams, including advice thereon,” Lavery said. “These recommendations seem to have been placed on the backburner, with the Treasurer announcing a review into the current retirement income system (including the age pension, compulsory super savings and private savings). Presumably, this review will need to be completed before any policy positions are established.
“It is a similar story when looking at commissions on life insurance,” Lavery said. “In 2021 ASIC will review the Life Insurance Framework (LIF) reforms that limited upfront commissions, then government policy will be set in response to the review. At a recent industry summit, the Finance Minister, Mathias Cormann, was noted as saying that the government will still need to ascertain if commissions are in the best interests of consumers.
“The issue is, however, that almost no research has been conducted domestically into the impact removing commissions would have on consumers’ likelihood of purchasing insurance or seeking advice on insurance. If the 2014 review is an indication of the approach to be taken in 2021, it is unlikely that ASIC will fill this knowledge gap.”
