Don’t look for FASEA exam ‘loopholes’: AFA

The Association of Financial Advisers (AFA) has called on advisers who still have not passed the Financial Adviser Standards and Ethics Authority (FASEA) exam to do everything they can to pass the exam this year despite FASEA saying existing advisers could sit the exam next year. 

During the Senate Estimates Committee on Tuesday, FASEA chief executive, Stephen Glenfield, said under a section of the Corporations Act “existing advisers” while suspended from the Australian Securities and Investments Commission (ASIC) Financial Adviser Register could sit the FASEA exam next year but could not provide advice while they were off the register. 

“You can’t give advice during the period you are off. So, the question would be ‘can you wait a period to try again?’ Or if you don’t think you can’t pass you have to think about moving your business on,” Glenfield said. 

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“I don’t have ability to provide any time extensions.” 

However, it was unclear whether advisers who had been removed from the FAR would still be classified as “existing”. 

AFA chief executive, Phil Anderson, told Money Management that he strongly encouraged advisers who wanted to continue to provide advice next year to do everything they could to pass the exam by the last exam set in November. 

“The government has shown no indication of any further extension or any exemptions. So, it would be wrong for an adviser to do anything other than doing everything they can to pass the exam this year,” Anderson said. 

“We don’t believe there is provision for advisers to come back and do the exam next year if they’re an existing adviser. 

“If they haven’t passed the exam this year they would have to go through the new entrant pathway, which requires a completion of a FASEA-approved degree, the professional year, and will still need to complete the exam. 

“We don’t want anyone thinking there might be an alternative option or a loophole as government has not shown any indication they are willing to provide any further extension.” 

Money Management has reached out to FASEA for a comment. 

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Glenfield has a history of being loose with the truth. Now he has gone to whole new level. For advisers that don't pass this year, they must turn off all fees and commissions or transfer their book to another adviser. To return, they must complete a PY. Good luck finding someone to take them on. The horror FASEA has inflicted upon the financial advice profession is bad enough, but these lies are just kicking people while they are down. He just wants the politicians off his back and couldn't give a stuff about the havoc they have caused.

Why would they need to do a PY?

My understanding is that if you aren't an adviser come 1/1/22 then you will be treated as a new entrant - subject to a PY, passing the exam and full educational requirements!

I’ve done the required units to make my degree compliant. I’ve sat and passed the exam. If by now, you haven’t worked out that this entire process is designed to flush out the substandard operators in this industry, you should have quit long ago.having been in this game for decades, I’m seeing plenty of dopes who THINK they’re hot shit, failing to make the grade. If their clients knew that they’re not up to scratch, do you think they would mind? Of course they would. Let the clean up continue. Bring on 2022

I'm in the same boat as you big trev, as far as I sat and passed the FASEA exam early and completed the Ethic's unit to meet standard. However, I think you are pretty naive or narrow minded if you think that all the 'dopes' will be gone after the deadline passes. Sure, education and experience is one aspect, but ethical behaviour is the other and there have been plenty of examples where 'highly educated' individuals have and continue to act in a highly unethical manner, bringing harm to their clients.

I agree with you Ben, you need some serious smarts and know all the ethical loopholes to pull some of the scams we've seen lately. you might say the petty crims have been pushed out and now the big players have got the field.

Agree with the sentiment entirely but let's not forget that this "process" was not designed to flush out substandard operators, as you've stated. The CBA Advice scandal and the FPA created a Union, that resulted in the birth of FASEA. It was a get out of jail card for the CBA where the FPA and the CBA jointly called for higher education standards, and ethics exam and commitment to a code. In any exam there is always a failure rate....To forget this is just setting ourselves up for FASEA 2.0.

That's a pretty ordinary comment. We've got enough punters taking shots at us, we don't need our colleagues to add to this. I'm all for education and demonstrating competency. I know good advisers who aren't dopes failing the exam. I've passed the exam. I've sat numerous exams and this is by far the most poorly designed exam I've ever seen. Leaving the room I had no idea how I'd gone. And providing just a pass or fail grade makes it difficult for everyone to understand where they can improve - not only those who failed, but also those who passed. I suspect we don't get this level of detail as then we'd have the information to expose just how incompetent FASEA is.

Agree JK. The fact that our industry couldn't unite due to selfishness and own agendas is why we are in this position.

Yes I agree. Sat plenty of exams over the last decade, and the FASEA one was so, so poorly done it was disgusting.

Its sad because I actually agreed with the concept of an exam to cut some dead weight (or get them to shape up). Unfortunately, the FASEA exam does absolutely nothing for the industry. It does not test whether you're a good adviser, and so many of the questions were very far from the real world.

Too true SD, questions so far from the real world because the people designing the exam have never sat in front of a client or never technically 'left school' for that matter, having spent their entire career thus far in the lofty 'unaware' heights of academia. I suppose it makes as much sense as wholly UNQUALIFIED politicians running the country. When do the politicians sit THEIR ethics exam? Are politicians getting qualified like us by doing THEIR level 8 degree by 2024? One rule for us and one for them, as usual. Disgusting.

As I understand the legislation and having studied it very closely, if you come off the FAR from 1 July 2022 you are a new entrant. so AQ 7 with bridging topics, AQ8 or higher, you still need to pass the FASEA exam and do the professional year. Get it done, boys and girls. The Government has bigger things to do than worry about us, that's been made pretty clear.

So if you change dealer groups on the 2nd of July 2022, you are now a new entrant? Because to change dealer groups your current licensee will drop you off the FAR and the new group will then put you back on again. Can you tell me where in the legislation you found the version of new entrant you are talking about because it sounds super dicey

This makes no sense, to be qualified to sit the exam you need to have been on the register since 2015. There is nothing stopping you as per the rules from sitting the exam as a ceased adviser (there are about 1,500 ceased FAR members who have sat the exam whilst ceased), you don't need to have full education requirements if you have been on the FAR until 2026 so why would you need to be a new entrant if you do the exam next year? I don't think Phil knows what he is talking about.

According to FASEA website to be considered an existing adviser you need to pass the exam by 1 January 2022, as well as the other requirements.

but an existing adviser is:
Have been ‘current’ on ASIC’s Financial Advisers Register (FAR) at any time between 1 January 2016 and 1 January 2019; and
were not prohibited from providing advice on 1 January 2019 (either through a banning/disqualification/ enforceable undertaking); or
at any time between 1 January 2016 and 1 January 2019, they provided personal advice in a foreign country to retail clients in relation to relevant financial products; and
are not prohibited under the law of the foreign country from providing such advice on 1 January 2019

To practise post 1 Jan 2022 you need to have passed the FASEA exam

Dera "L". If anyone in the industry knows what they're talking about, it's Phil Anderson. He is absolutely correct in his interpretation. There are two hurdles/benchmarks for existing advisers (those registered on the FAR at any time 2016 - 2019, irrespective if they've been removed since):i. Pass the exam buy 1/1/22 or be removed and you can't be re-registered until you sit the exam, BUT you will be classed as a "New Entrant" (actually you can use the "Career Changer" category), and have to go through the PY and ii. Meet the education standard by 1/1/2026. Passing the exam by 1/1/22 gives you another 4 yrs to meet the education standard, and if you don't then it's back to square one. It's important to note that once an adviser loses their "Existing Adviser" status (e.g. by not passing the exam by 1/1/22, they are no longer eligible to use the EA Pathways that 'shortcut' the requirements to meet the FASEA Approved degree/bridging courses. These advisers will have to enrol in a Grad Dip. and only the education provider can assess any RPL credits you may have. noting that they can't give you any more than 4 credits (or 50% of the course load) against an 8 subject Grad Dip FP.

Can you link where you are getting that information, everything thing I have read from FASEA seems to be opposite to what you are saying. (This is more about facts, FASEA requirements no longer effect me as I am 100% done, education and exam).

sorry 1/1/16

Hi L. you need to go back years, somewhere in there was the word "continuous" which I'd have to look for again and don't have time. During this period which was extended up to December this year you could be ceased and still sit the exam and re-register on the FAR. From January is you're ceased and want to come back on, all bets are off. Hey, if I'm wrong no one needs to worry. If I'm right.....

Existing advisers as per the FASEA definition do not need to do a PY

I stand corrected. I know I read this years ago as it had to do with a business partner retiring but possibly coming back as a consultant. this may have been talked about back in 2017 or 2018 because we all agreed this was a risk and decided to keep the said persons' registration going. As you rightfully point out, that's been clarified. thanks for the input.

It would be a super dangerous thing making someone a new entrant just because they dropped off the FAR for a little bit, until we have individual registration anyone changing dealer groups would be considered a new entrant as of next year if it was the case. That's why I don't understand the comment made by Phil because FASEA says the complete opposite, I think the biggest drama for most if they don't pass this year is having to drop off and cease practising until they do and who knows when the next exams will be so they could be waiting a while until they do, I can't believe people have left it this long to do the exam, I got it done Feb last year just to get it over and done with.

Existing Advisers don't need to do a PY but if to be classified as an existing adviser you need to have passed the exam by 1st Jan 2022, if you don't then you are off the FAR and the only way back is as a new entrant. It's not a matter of whether you are taken off for the FAR because you've taken a career break or switched dealers, you need to have passed the exam by the end of the year or you're no longer an 'existing adviser'. What Phil has said is correct in my opinion.

but an existing adviser is:
Have been ‘current’ on ASIC’s Financial Advisers Register (FAR) at any time between 1 January 2016 and 1 January 2019; and
were not prohibited from providing advice on 1 January 2019 (either through a banning/disqualification/ enforceable undertaking); or
at any time between 1 January 2016 and 1 January 2019, they provided personal advice in a foreign country to retail clients in relation to relevant financial products; and
are not prohibited under the law of the foreign country from providing such advice on 1 January 2019.

After 1 Jan 2022 an existing adviser needs to have passed the exam to practise, they won't magically become a new entrant.

You missed the section on the right hand-side of the page that was linked in the original post:

If a person is an ‘existing adviser’, they will need to meet the following requirements:

Pass the exam by 1 January 2022.
Complete an approved qualification by 1 January 2026.
From 1 January 2019, meet continuing professional development requirements.
From 1 January 2020 comply with FASEA’s Code of Ethics.

If you don't pass the exam by that date you are no longer considered an existing adviser and do not get the benefit of credits for your existing study, you will need to go back and start again as a new entrant, including a PY. The institution that you study through will give you credits for the study you've already done but FASEA won't.

Does it say that you will no longer be an existing adviser? There is another part on the website that says an adviser can take time out and then do the exam post 2022 and still be classed as an existing adviser they just need to do the exam before being put back on the FAR

I found it, I stand corrected OMG that was real painful to find and a bunch of other spots say otherwise this is in the FAQs under exam but other spots say that you can get reregistered just by sitting the exam in 2022 :

What are the consequences for an Existing Adviser who hasn’t passed the exam by 1 January 2022?
For an existing adviser who has not passed the exam by 1 January 2022, their Licensee will be required to remove their authorisation to provide advice and notify ASIC that they have not met the examination requirements of the Corporations Act. Their status on ASIC’s Financial Adviser Register will be updated to reflect that they are no longer authorised and therefore “ceased”.

If they want to return to practice, they would be classified as a new entrant and would need to meet the new entrant requirements.

So if an adviser hasn’t passed in November they need to go on leave and go off the FAR before 30 December in order to not be a new entrant

This is what the FASEA website says about coming off the FAR:

There are provisions for existing advisers to take a “career break” and then return to the industry. When they go on leave their authorisation is ceased by their AFS licensee and their AFS licensee updates ASIC’s Financial Adviser Register (FAR) for this. The adviser’s leave takes them past 1 January 2022 and/or 1 January 2026. In these circumstances, the adviser will need to have passed the exam and complete the education requirements, prior to being re-authorised to provide advice rather than passing the exam and completing the degree requirement during their career break.

In addition, those who take career break of longer than two years, may be required to undertake additional CPD on their return dependent on their Licensee requirements.

Good luck to you all!- Im leaving and have bigger fish to fry -what was once a vibrant industry after 4 decades- Sad but true the lunatics are running the asylum!

mate, great. the smart ones already left.

that's really all we can do. just walk away this isn't fixable and there is no political will to try.

so the best thing for financial planners to do is just fold and leave and let others sort it out.

all too hard basket there is more to life than worrying about financial planning

we all have family and children and we owe it to them to be fully engaged, not to be so stressed out, your mental health and well-being are important so think about that for a change. think about your children and families for a change.

look after yourself. this is too big a mess with too many vested interests with entrenched positions who won't' let go of their old ways.

there is an old saying that says something like, it is easy to learn new habits, it's very difficult to let go of old ones.

adios, compatriots. signing off after 25 years.

Time to become a 'Money Coach'

One thing is for sure after reading these comments I don’t think anybody out really know ? It is all guesswork at present and everyone is reading into the legislation differing opinions and in particular the one that suits them best
Isnt it time out association asked the hard question and find out for sure
Even Phil’s comments are waivering it is still unknown ?? What that mean ?
If you intend to stay! And like me have no choice financially by hem study hard and pass before 2022
Without further clarity there is no other choice
I certainly hope there is one though for the health of our adviser associates who find themselves in a terrible situation brought about by the banks and bigger players who have simply left and sit in the branches like vultures waiting to return and feast on the remnants of a by gone industry

I don’t remember seeing or hearing anything about turning off commission or selling your book
It’s simply your out of the advice arena
Can someone point that out in the legislation that everyone seems to interpret differently ?

If you're out of the advice arena then you can't collect fees or commissions.
Its really simple.

Phil Anderson is on the money (again). He is 100% correct. You lose your "existing adviser" status if you don't pass the exam prior to 1 Jan 2022. FASEA should (and can) provide relief to get rid of the stupid 90 day exclusion period between sitting the previous exam and registering for a resit. At this late stage, it's the least they can do.

Maybe there would be a reason to cease fees if you cannot provide service ? But risk commissions are a different situation altogether
Not to mention who actually owns the clients ? Get more involved and “murky” the further you dig
There would have to be a breach of the trade practices act to have your only income suddenly stopped because you have not yet passed ethics exam ? Retrains of trade of such ?
I have no doubt that these issues will be raised at some stage if and when that is applied ?
Would you not just stop giving advice and have your book leased out or sub contracted ?
What a bloody mess this is

It’s not that complicated or messy at all.
You either pass before the end of the year and carry on BAU.
Or you don’t pass it and you’re no longer on the FAR and therefore you cannot collect any income.
To continue to receive income you need to be registered.
As that annoying Meerkat on TV says - “simples”

she doesn't even need to worry about turning off the fees, if you have not passed the FASEA exam by 31st December on 1 Jan your dealer group will remove you from the fasea register and turn off all commissions and fees to be paid to you.

as the meerkat on TV says - simples,

I was in the first tranche of Advisers to complete all FASEA requirements. I hold two FASEA approved degrees and one FASEA relevant degree. I LEFT the industry to go work as a lawyer. Its the smart ones that have left. Those with no choices (incl. business owners) are forced to stay.

make it two smart ones you and me. have three, two relevant degrees, and one fasea approved degree passed the exam out the door.

the risk and reward are just not there anymore. why would you stay? unless you have no choice.

you would be mad to stay. it's in shambles.

who gets the reward? not the adviser. who gets the risk, the adviser. make sense? not to me.

there are a lot of Pollyanna's who think this will get better. it won't because it's not a priority for anyone. everyone thinks digital advice is the solution. as if, if it were, there would be no barristers, lawyers or accountants or specialist medical practitioners, they do have you know.

the funniest thing out of all this is the dealer group heads who are going far out if I don't get volume bonuses and need to get to 400 to 450 to survive as their only income is now adviser fees, and many know they will never get there, even at $20k a piece and one year reprieve from paying the fee Dover only had 410. the vast majority of dealer groups just won't survive. they know that.

the fpa and afa won't survive because they need the total number of registered advisers at 18,000 or more. it's already 19,800 with 2 to 4,000 accountants about to sign off at the end of this year.

probably another 5 to 6k will be gone by 2026 leaving probably between 10,000 to 13,000 then the adviser levy will triple. has to.

so as you can see the downside is all but certain, the upside is in the range of very uncertain to unlikely or improable. in these types of scenarios, the first and best dressed make for the exit, real quick.

if you are at the margin, do yourself a favour, exit now.

why do you still display your CFP when you are not even a practicing adviser.

Non-practicing category is still a member and still paid up until 30 June.

CFP stands for certified “financial planner” financial planner is a restricted term which can only be used by authorised relevant providers.

Article states: "Or if you don’t think you can’t pass you have to think about moving your business on,” Glenfield said.
. . . so, is that a double negative or is it somehow meant that way - fully left in the dark as to what that statement means - YES or NO? What are the Money Management editors doing? Do they have editors OR did this guy really say that in THOSE exact words? If so what does he mean?

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