ASIC pushes for degree qualifications for advisers
The Australian Securities and Investments Commission (ASIC) has released a consultation paper seeking to introduce degree education as a minimum education standard for financial planners by linking planner knowledge and skills to the advice that can be offered.
ASIC will push for a degree minimum from 2019, stating: “We are proposing that, from 1 January 2019, the minimum educational level requirement for advisers who start providing financial product advice on Tier 1 products should be raised to a Level 7 Bachelor Degree level”.
ASIC said the rationale for increasing adviser education to the degree level come from recommendations from its own research and “independent movements in the financial services industry for advisers to be viewed as professionals”.
In the paper, titled 'Licensing: Training of financial product advisers - Update to RG 146’, ASIC said it would introduce three training standards regimes titled 'A’, 'B’ and 'C’, with Regime A reflecting the current standard under Regulatory Guide 146 (RG146) and applicable to all advisers currently working.
Regime B would be introduced for new advisers who provide financial product advice from 1 January 2015 until 31 December 2018, as well as current advisers who change their advice activities. Regime C would apply from 1 January 2019 for all new advisers and current advisers who change their advice activities.
In the consultation paper, ASIC stated that Regime B and C would require advisers to have higher standards of education. To provide advice on Tier 1 products would require an Advanced Diploma-level education under Regime B and a Bachelor Degree-level education under Regime C.
Advice on Tier 2 products would require Certificate IV-level education under Regime B and Diploma-level education under Regime C. Tier 1 products cover the full product spectrum except those in Tier 2, while Tier 2 covers most general insurance products, consumer credit insurance, basic deposit and credit products.
The paper has also proposed that advisers who already hold RG146 level training will not need to retrain to the proposed higher standards across the board, but only in the newer areas in which they wish to work.
ASIC also stated that an adviser would be considered to have changed their advice activities if, after having completed initial training, they add a new area of specialisation to their advice activities when they are already trained in other products of the same tier. The same would apply if they moved from providing general advice to personal advice, or moved from Tier 2 to Tier 1 products.
Association of Financial Advisers chief operating officer Phil Anderson said the planning profession had yet to work through and discuss the specifics - and dialogue with ASIC would be necessary.
“The key question is this - is the specialist training to be at a degree level for all or just for some, or will the whole training for all apply at the higher level?
“We are still checking with ASIC as to how this will apply and so are currently reserving our position. However, given the extended consultation period we do have time to explore this issue fully in terms of what it means for our members,” Anderson said.
According to the regulator, the driver behind the review and consultation regarding RG146 comes from past Parliamentary Joint Committee inquiries into financial services, industry consultation, surveillance activity and ASIC research into the skills of those providing financial advice.
ASIC also stated that Australian Financial Services Licensees were concerned that some training courses were too short to adequately train to the RG146 standard, and also concerned about a disparity in standards between different training organisations. ASIC also noted that AFSLs commented that some training providers assessed the knowledge and skills of those seeking RG146 accreditation far too easily.
ASIC Deputy Chairman Peter Kell said that training standards were important in ensuring investors and consumers received quality advice - and improving standards was part of ASIC’s work as regulator.
“A review of the training standards is necessary to more accurately reflect the knowledge and skills required for advisers to provide quality financial product advice,” Kell said.
Submissions to ASIC will close on 30 September 2013, with the regulator stating the long time-frames proposed in the paper were to give the industry sufficient time to prepare for the higher training standards.
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