ASIC’s ethics called into question by exam candidates

Despite the financial adviser exam being rooted in ethics, two professional year (PY) advisers believe the lack of support and transparency from the regulator is unethical and are calling for changes.

Results from the 5 June ASIC exam show candidates achieved a pass rate of just 66 per cent, which is the second-lowest mark since short-answer questions were removed at the start of last year.

Speaking with Money Management, one of the primary issues raised by candidate Hannah Elliott, an associate adviser at Stellar Wealth in Queensland, is the lack of transparency from ASIC. 

The pass mark, which shifts with each sitting, is not released by ASIC and candidates who sit the exam are only told if they have passed or fail, leaving them clueless as to whether their mark was a narrow miss or a much bigger gap.

This, Elliott argued, poses an unnecessary challenge during exam preparation because those undertaking the exam are unaware of what mark to aim for and, subsequently, it is harder for them to know where they went wrong if they have failed. 

“I would like to see the historical pass marks at least published so that we know when we’re sitting practice exams what to aspire to, what benchmark to try to hit so we know whether we’re on the right track or not,” Elliott said.

According to ASIC, the pass mark for each sitting of the exam is “set by an expert review panel using formalised and internationally accepted standard-setting procedures”, with the starting point aligned to the range of a typical university credit grade of 65–74 per cent.

While this provides a minimum range for exam-goers to aim for, Elliott argued that even just having access to prior pass marks would make a difference.

“I just think there should be some transparency, at least around the feedback that’s given and the historical data on it,” she said.

Another issue that has been raised in the past is the lack of feedback and support post-exam. The ability to request a re-mark was revoked in January 2024, when the short-answer questions were removed from the exam but, even prior to this change, a re-mark was only available on the short-answer questions, never multiple choice ones.

While there is some feedback given to candidates afterwards, Elliott said it is quite generic and fails to explain which question it applies to, making it hard to pinpoint exactly where she went wrong.

“I’ve never asked to be spoon-fed. I’ve made that very clear. I’m not asking for an easy ride through,” she said. “I think the exam should be appropriately hard, and I think that not everybody should pass it, but I think that when you’re not given any direction whatsoever afterwards, you’re not even told what percentage you got, or what out of 75 questions you got right, it’s not setting you up to for success, and it’s not supportive.”

Meanwhile, Ben Freer, a broker assistant at Bell Potter Securities, told Money Management that when he showed some of the practice exam questions to advisers that had been in the profession for decades, they were left unsure due to the wording on questions despite their experience.

“It doesn’t read well. It’s actually confusing, and then to not give feedback. So, it’s not transparent in what you’re actually looking to improve,” Freer said.

With this in mind, Elliot argued there should be the option to explain reasoning because some questions and answers could be presented with clearer wording. 

“I just feel like with some of the questions, with how subjective I feel the answers are, you should be able to argue your case as to why you can answer that way because I don’t feel like some of them are as black or white as what they’re trying to make it out to be in the question,” Elliott said.

Freer likewise said there were often two answers where he felt either could be right, and there should be an opportunity for exam-goers to explain how and why they selected a particular answer.

ASIC said all questions go through a process of expert review panels, psychometric item analysis and item adjudication before making into a paper. 

Emotional impact

On top of being left unsure following the exam with no recourse available, Freer noted the mental toll of going through the exam process as well as the financial cost. The exam costs $1,500 – up from $973 in the past – which can be a significant expense for an individual in the early stage of their career, especially if they end up needing to sit multiple times. 

“Most of us are just out of uni and in entry-level positions. With the current environment, the economy, it’s pretty hard for these expenses,” Freer said.

“I’m now in this position at work where I actually can’t go any further, even though I’m still here learning, I can’t do anything. I might have this position until I pass. It could be this next exam, it could be in six months, it could be in a year. It’s pretty daunting.

“It feels like it’s not even ethical what they’re doing, which is really confusing because you’re like, ‘I'm sitting an ethical exam, yet you guys aren’t even helping in any way,’” he said.

“It’s been really upsetting.”

After everything the profession has gone through to rebuild itself on a foundation of ethics and transparency, Elliott said she believes the same should be expected from ASIC when it comes to building and supporting the next generation of advisers.

“This is an ethics exam, and we’re supposed to uphold all of these standards and these ethics, and I’m totally on board with that. I don’t think they’re holding themselves to the same standard in terms of the support and transparency around these. I just find it’s almost a double standard,” she said.

“If you’re going to demand transparency and integrity and all of these ethical behaviours, then they should at least be displaying them. It is subjective to a point, they definitely may think that they are, but when the majority is speaking up and saying that it’s not happening, I think they need to listen.”

Along the same vein, Freer said: “How can we learn and improve when we’re not told what we did wrong? I find that unethical.

“If you scold a child and you don’t take the time to then explain what they did wrong, that’s not an ethical thing as a parent to do. So, for this exam, they need to be ethical about it and be transparent and show us where we need to learn and improve.”

In response to the comments, ASIC told Money Management: "The exam is not an educational tool, it exists to benchmark participants against a standard outlined in the legislation. As such, specific marks or feedback on specific questions cannot be provided. This also protects the integrity of the exam and reduces the need for rewrites of questions.

"The legislation specifies that participants will only be notified about whether they have passed or failed the exam. However, unsuccessful candidates do receive general feedback on the areas in which they underperform so that they know which areas to focus on should they wish to resit the exam."