Does FASEA regime discriminate against women and older advisers?

6 December 2018

The Financial Adviser Standards and Ethics Authority (FASEA) regime, continuing professional development (CPD) standards and time-table are discriminatory against part-time advisers particularly women and older advisers, according to life/risk-focused dealer group, Synchron.

Synchron chair, Michael Harrison has also accused FASEA of having a double-standard, having taken 18 months to determine the draft standards for the industry while not commensurately extending the implementation time-frame.

“While on face value the CPD standard put forward by FASEA appears reasonable for full-time financial advisers, the requirements will make life difficult for part-timers, many of whom are women, and also for older advisers,” he said.

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"We believe advisers who work part-time and flexible hours will not be able to complete the required study within the timeframe FASEA is proposing and still maintain a high standard of service to clients," Harrison said.

"We recognise that financial advising is attractive to women who want to balance their work and family commitments, particularly those who want to run their own businesses and believe the proposed requirement will therefore have a disproportionately negative impact on female advisers."

Harrison said the requirements would also negatively impact on older advisers who had extensive experience and considerable skills but no formal university qualifications. 

“Our concern is that these highly skilled and experienced advisers will find it very difficult to maintain these hours when, more likely than not, they will also be required to study for a degree,” he said.

Harrison said that while many older advisers wanted to work well into their later years consistent with the Government’s rhetoric around wanting people to work longer so that they are less of a burden on Australia’s welfare system, the FASEA reforms might force an estimated 5,000 plus advisers out of the industry.

“There will of course be a flow-on effect to support staff who will also lose their jobs. The exit of so many people from the industry will not only result in unemployment, it will increase the cost of advice, potentially making it prohibitive for many people to access.”

Harrison said Australians had to have access to financial advisers who were ethical, experienced, appropriately qualified and committed to putting the interests of their client first but that “the FASEA proposals as they currently stand will force risk advisers in particular to study for a degree that is largely irrelevant to their day-to-day operations”. 
Mr Harrison was also critical of other FASEA proposals on other grounds, including: 

•    Minimum and overly prescriptive standards of higher education
•    Inadequate recognition of experience
•    No differentiation between different disciplines -  e.g. risk only advisers
•    An unrealistic and unfair implementation timeframe 


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I appreciate that with any change, people can be effected to different degrees. However, I would disagree with any attempt to water down the educational requirements for any group. Imagine if teachers or nurses tried to argue this. Also, I am genuinely confused how "Risk Advisers" can even exist in a post-FOFA world. If somone could explain that to me, I would appreciate it.

Mark7.....I can only assume you are referring to Risk Advisers receiving remuneration via commission ?
I am genuinely confused at to why you would be genuinely confused !!
Firstly, because Risk Advisers are bound by the Best Interest Duty.
Secondly, because the receipt of remuneration via a commission model is legislatively compliant.
Thirdly, the impact of the LIF changes to the remuneration models are currently in progress.
Lastly, every consumer should be offered a choice of options as to how they pay for advice and services.
Prescribing a singular payment option for advice is ridiculous and promoted by those individuals who have an ideological and philosophical hatred of commission payment because they believe it labels them with a brand that doesn't sit within their own self image.
For your information, I am an ex-Teacher who has spent the last 30 years in Financial Services and I would totally support the fact that older and experienced teachers whilst they must keep their professional development up to date to fully understand the latest research and learning strategies they should not be asked to completely re-train or re-qualify in order to satisfy a
" one size fits all " approach if they are 50 plus years or older.
They must be competent, knowledgeable, compliant and effective just as any professional would be expected to be so.
However, there is an agenda at play from FASEA and that is a strategic, purposeful and deliberate cleansing of older
advisers from financial services.
This will result in a massive loss of intellectual and experiential capital based on years of working with a diverse range of clients.
Financial Advice is first and foremost a people business. It always has been.
Without an experienced depth of understanding about human emotion, empathy, perception and judgement, the rest of the advice process is flawed and transactional at best.
This is not to say that some younger advisers may also naturally have the skills and ability to utilise these qualities, but to deliberately force the hand of so many good, older people in a very short space of time will result in an adverse impact to the consumer. It will not result in a benefit and it will not eradicate unethical behaviour or poor advice.

Exactly correct. The fact that FASEA cannot provide a definitive list of the 24 units required by a new intern, is a disgrace. We have several now wanting to transfer across from the Finance & Accounting program, but it is simply impossible to guide them currently on this.

Existing advisers should have an extended time, but be required to do 1 unit per year, until completed. That may take 6 to 8 years from 2019.

In relation to exams, providing your statement of advice meets ASIC requirements & you have full backup from a top rate Tech Services Dept, and exam proves very little in providing top advice to clients. You could pass your exam & still get locked up for criminal behaviour. The way all of this regulation against advisers is going, it has crossed my mind to take a case to the High Court on a range of basic discrimination issues & unnecessary administrative costs that these regulations impose. Its high time advisers took up the fight against forces that are attempting to build a monopoly for certain fund providers. Their real game is to eliminate advisers, and when that has been achieved, watch them ramp up the fees on fund members.

Well said Steve

Thanks for your reply Max, however my query regarding "risk advisers" was not in reference to commissions (which I have no problem with), but in reference to them fulfilling their Best Interest Duty in practice, especially in their ability to "take any other step that, at the time the advice is provided, would reasonably be regarded as being in the best interests of the client, given the client's relevant circumstances".

Let me give a hypothetical example. A client with 3 Industry Super funds, each with some insurance visits a Risk Adviser. They are advised to replace (and enhance) their existing insurace with a number of retail policies, which they do. But they still have three Super funds when almost certainly, owning just one would be in their best interest. In this hypothetical example, without providing Superannuation advice, I can't see how the adviser has met their FOFA obligation to "take any other step ...".

Without making this reply too long, there are other potential concerns as well. How can the affordibility of insurance be demonstrated without long term cashflow modelling? How can the ownership of some insurances be correctly structured without consideration of their Superannuation? How can strategies be put in place to mitigate the erosion of retirement savings from insurance premiums without providing Superannuation advice?

It just seems to me that any advice that is not wholistic would fall short of the "take any other step ..." requirement of FOFA.

It will have to do with 'scope of advice' where advice is limited to personal insurances but they will need to refer to an adviser that can provide super advice. No different to us referring clients to see solicitors to get their Wills done, even though we talk about estate planning.

Doctors who work part-time have to complete the same number of CPD hours as their full-time colleagues. Why should part-time advisers requirements be watered down? Is that best for their client's?

This matter is not about a watering down of the annual CPD hours that needs to be satisfied.
A full time or a part time adviser should be required to complete the required number of CPD hours.
This matter is about the discrimination toward the older advisers with many years of experience, not being provided with consideration in regard to having to completely re-educate, re-train and re-qualify to a standardised proposal, even if these advisers are within 5-6 years of retirement.
It must be asked, what real, measurable value and benefit this requirement would actually deliver to the consumer if these advisers are already subject to the Best Interest Duty , the maintenance of required CPD hours and be assessed compliant through the annual audit process.
This education process for older advisers is nothing more than a deliberate culling exercise to obliterate the historical nature of the financial services industry and to start fresh without a progressive and structured succession plan over a reasonable time frame.

A good point, but I'll put it bluntly. If a financial adviser gets an opinion wrong the client may suffer some form of financial discomfort or financial degradation, however, if a medical doctor gets it wrong, someone might die.

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