The chair of the House of Representatives Standing Committee on Economics, Tim Wilson is right. The Financial Adviser Standards and Ethics Authority (FASEA) should be the subject of regular oversight by a Parliamentary committee, probably his.
Indeed, it says something about the way FASEA was created under the watch of the former Minister for Financial Services, Kelly O’Dwyer, that the authority has not been subject to closer Parliamentary scrutiny beyond its occasional appearances before Senate Estimates because FASEA remains problematic.
And, right now, FASEA is problematic for the Government not just because it has failed to win the confidence of the broader financial planning industry but because the exit of the major banks means its funding mechanism has expired and the Treasurer, Josh Frydenberg, must look to other funding sources.
The most-likely primary source of funding will be a levy on the very financial planners who have evidenced so little faith in FASEA. That is, of course, unless the Government looks to the option of folding the authority into the single disciplinary body as recommended by the Royal Commission and which will be responsible for monitoring adherence to the FASEA code of ethics.
FASEA should, by now, have earned the unquestioning support of financial planners as an integral part of the professionalisation of their industry – the respected overseer of educational pathways and processes and, perhaps more importantly, the originator of a code of ethics to which planners can adhere and be proud.
The reality, of course, is that FASEA has fallen well short of gaining anything like planner support. From the outset it became mired in questions as its first chief executive,
Deen Sanders, walked away and then even more questions as the timetable around some of the key educational deliverables began to erode and then even more issues as it failed to deliver sufficient transparency around the code of ethics.
As documents recently obtained under Freedom of Information have revealed, even the closely-consulted Australian Securities and Investments Commission (ASIC) held concerns about FASEA’s approach and made those concerns abundantly clear.
FASEA claims it consulted widely on the development of the code of ethics but, in the absence of the authority making all the relevant submissions public including those of ASIC, we only have their word for that and few advisers seem willing to take the word of FASEA on trust.
Of course, all of this could probably have been avoided if, from the outset, FASEA had been made regularly answerable to a Parliamentary Committee. It is a pretty fair bet that members of that committee would have been insisting on seeing all the submissions pertaining to the code of ethics and other issues being dealt with by FASEA and it is a pretty fair bet that they would have insisted that not just the chief executive but the chair of the authority make an appearance.
It remains to be seen how the Government chooses to deal with the future funding of FASEA and, indeed, the future of the authority itself. It is certainly fulfilling a necessary role in the professionalising of the financial planning industry but its chequered history to date seems to speak to the need for change.