FASEA exam takers should not rely on licensee policies

Financial Adviser and Standards Ethics Authority (FASEA) exam takers need to understand their legal obligations in the Corporations Act, rather than what their licensee policies asked them to do.

Speaking at a webinar hosted by the Association of Financial Advisers (AFA), Amelia Constantinidis, FASEA standards director, said this had been an issue with key advice documentation and was an area of underperformance across all exams, not just the May exam.

“You might all think you know exactly what you need to do in terms of advice documentation and you probably do, but it needs to be related to the scenario provided in the exam,” Constantinidis said.

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“But I’d also encourage you to all understand your legal obligations stated in the Corporations Act rather answering questions based on what your licensee policies are asking you to do.

“There are differences in some licensees in terms of what is the requirements of the Corporations Act versus what your licensees ask you to do.

“I’m not saying they’re wrong, but there are differences and we aren’t assessing you on your licensee policy, we’re assessing you on the legal requirements.

“What I’m highlighting here is not only the underperforming areas for the May exam, but we are seeing these trends across all exams.”

Another one of these trends was identifying breaches and what needed to be done in terms of reporting a breach.

“It’s not [only] your licensees job just to know what a breach is, when to report it and how to report it,” Constantinidis said.

“As an adviser, it’s your obligation to understand when you have breached, when you need to notify your licensee or who to notify and what they do with it.”

Then of course, there was understanding the code of ethics and how it applied to different client scenarios.

“We really encourage you to look at our recent guidance materials that we provided, it does include the intent of each of the standards, how you look at it from an overall perspective but also how its applied to different scenarios,” Constantinidis said.

“The other key area is judgments and biases, so not only understanding client biases but also your own in terms of how you’re making decisions.”

David Glen, TAL national technical manager, said it was not necessary to learn everything off by heart but it was recommended for some fundamental issues and principles.

“That will stand you in good stead when you’re under exam pressure and you can recall those particular issues,” Glen said.

“Best interest is a fundamental that needs to be in the mind; don’t rely on the exam material. You’ll have to plough through tracks of corporations law to locate that and that’s not a good use of exam time.

“Safe harbour steps, code values and standards – those need to be embedded in the mind so you can recall those fundamental requirements quickly and efficiently.”

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According to their LinkedIn profile, the person referred to above as the "FASEA standards director" does not appear to hold any financial qualifications whatsoever.
Is this correct?

Wouldn't surprise me. How many politicians have any background related to their portfolios? Have a look at the LinkedIn profile of the head of our most prestigious professional organisation. Filter through all the waffle and he was an actual planner for about 20 months. That's our world.

I guess that's a major contributing factor as to why the Industry is where it is now; a shambles and a mess which isn't going to change in the short term until Industry people become involved in the reshaping of our world. I'm not sure too many of the older statesmen can be bothered ???

We went self licensed years ago when we noticed our mega-licensee was more and more forcing us to work contrary to the Corp Act and the client's best interest. There's only so much time you want to spend trying to educate your licensee and their army of salary auditors before it's time to move on. I'm not a fan of the FASEA process but I feel Amelia is pointing out something many of us have already noticed from doing the exam vs what's been pushed on us as "best practice" by vested interests.

This is an excellent point from FASEA. There's a lot of advisers out there who consider themselves to be thoroughly compliant, and are all too willing to lecture others on the "right" way to do things. But in many cases they are quoting their licensee's over engineered, inflexible, inhouse compliance rules, rather than the law.

A fundamental element of the synergistic licensee/adviser relationship is the value-add that licensees create by employing specialist compliance officers, lawyers and risk managers who interpret the mass of legislation, regulation, case law, codes, industry standards, regulatory guidance and legal and commercial opinion and develop policy positions that facilitate defensible implementation of these rules into everyday practice (at great expense - which is justified when defending advisers before AFCA or the courts or when ASIC comes calling, or lately when superannuation trustees, acting like quasi-regulators, demand copies of SOAs/ROAs and other documentation on the threat of turning off and clawing back adviser fees). It's an oversimplification to suggest that an adviser can simply read the complex and sometimes competing rules and know instantly how to apply them in practice. Good licensees put a huge amount of effort into adequately training their advisers on the legislation and regulation (and particularly in light of FASEA, the new FDS, fee renewal and consent requirements and the new breach reporting and complaints handling rules coming in October) and advisers generally know that the pain they are going through is not licensee policy, its where the regulatory pendulum sits at present. The article also suggests that licensee policy is not respective of the legislation and regulation on which it is based which doesn't make sense. The last point is the reference to a knowledge of the Corporations Act. Having sat and passed the exam, I'd suggest that many of the questions that advisers struggled with were impacted by a decision on the most appropriate ethical approach to a case study-presented dilemma which would not be helped by knowing the (a) to (g) of the safe harbour rules in s961B(2) or meeting the code requirements under Division 8A. Most advisers can easily recall the 5 values and 12 standards of the code but for some of the requirements it is not easy (or possible) to implement in practise. And, for many advisers who have never before sat a 3.5 hour online exam and are deer in the headlights, it is a bridge too far.

it's true I don't know how lawyers, barristers, doctors, and accountants survive without an AFSL, dealer group type system.

when can we get a dealer group system for these other professions, they do very complex work and work with very complex legislation and ethical dilemmas and with no supervision at all. who is reading all the complex legislation for them?

I'd like to see a dealer group system for lawyers first. I think they need it, they keep sexually harassing their staff clearly they do not do enough ethical training.


look at this lawyer/ judge whatever, numpty. he needs an afsl type system to supervise him and monitor him and audit his work.

Everyone does understand that if you are licensed then the license is god - you have to follow their instructions to the letter.
The problem arises when the license gets it wr9ng and then passes it onto the planner to pick up the damages tab (AMP)

Add Westpac, NAB, CBA etc. Follow their rules to the letter and then 10 years later they want to tell you it was all wrong and please cough up 50% or 100% of the Bill based on criteria we won't share with you.

do you people want to go to jail or not or have your reputation permanently ruined and ruined personally and professionally. I have the power to just report a breach. do you want me to do it? just dare me, duke Nukem, I know you have your own license but I can still report a breach against another licensee did you know that?

wait till October. I will just report a breach to the advisers who are giving me a bit of lip now they have passed the fasea xam and did a grad dip of fp.

mind you no one else cares, people in treasury and the superannuation team at ASIC think you are all criminals anyway and that's why we treat you all as such. yes, criminals.

The fact that you assume nothing but breaches in my operation because I have experienced bad and consumer hostile policy with large licensees in the past is mind boggling. We spend a small fortune on external compliance, auditing and systems to ensure we're more compliant than our previous bank owned licensee ever was. We have a team member who is our FASEA standards officer and another who is day to day compliance and they have the authority to challenge the advisers if they think something is not right. The advisers must comply if the argument is sound. this is something we never had previously with any of the large licensees so save your breath, licensee boss. You're part of the problem not the solution. I've had enough of you people to last me a lifetime. Read your Dante, there's a circle in hell waiting for you.

I think that the "Licensee_Boss" comment you are responding to has a huge dose of irony and sarcasm in it, and you are "Taking the bait", as they "Take the piss"...

Aside from that, the F/S Advice Industry was deliberately structured this way in the FSRA, but of course, it has only gotten exponentially worse, as there is always something to "improve", "clarify", or "enforce".

Circa 2000-2002, I was told specifically and unequivocally by one of the early senior ASIC Compliance Managers that the Licensee system was designed to offload oversight, compliance, cost, and pursuit of AR's from Regulatory Authorities, and create "Sheriffs" with deep pockets who could discipline AR's, be fined if necessary, and would eliminate from ASIC the need to work at pursuing individuals, through business structures, Trusts, Companies, spouse's names, etc.

What other "Occupation" or "Profession" has a commercial "Interposed Entity" who can decide whether you can work or not, despite qualifications, experience, good reputation, client relationships, etc, etc, solely based on profit to them, personalities, etc?

The AFSL system is essentially "Indentured Servitude", based on the old English Public School and Australian Political and/or Convict Mentality of "Bludgeon, Bully, and Belittle", rather than uplift, motivate, trust, and enhance the knowledge, integrity, honour, responsibility, and sense of duty toward people seeking help/advice by "professionals".

For bureaucrats, politicians, failed academics pushing ideologies, rapacious lawyers, "Professional Victim" Consumer Advocates, and Mercenary Managers with agendas, there is ALWAYS something to improve in their ignorant, detached from reality pursuit of Utopia and "Making the world a better place", together with their own power, control, ego, and financial self interest.

"If we just had a little more..." money...; coercive power...; vastly intrusive data...; anonymous, unaccountable decision making power...; or childishly trying to reverse of the basic precepts of Western Law, Justice, and Democracy, such as "Innocent until proven guilty"; - witness APRA's foolish, juvenile desire to "Reverse the burden of proof" on Super Trustees, and now ASIC's idiotic attempt to turn Product Manufacturers into another layer of SoA Compliance Officers, ignoring the demarcation between "Advice" and "Product"...

BTW, this is similar to what the then ISC attempted to do with the "Life Insurance Code of Conduct" Adviser "CAR's" in the mid-late 1990's - have junior New Business clerks reviewing insurance and investment structuring.

IMO, the entire Governmental Political and Regulatory Structure is sick, perverted from its original intent, focus, and basic precepts; manned by self serving incompetent "Bureaucratic Totalitarians"; and well on its way to destroying both a vital economic sector [among many it already has] and Western Society as a whole. Bureaucracy is about blind, ignorant, unaccountable power and control, as if monkeys and hyenas should rule the jungle!

Alas - I digressed just a bit, but it was waiting to come out!

good point, and I probably shouldn't do this first thing in the morning. We should be able to agree to disagree on topics and behave like the professionals we're supposed to be. thanks for the response.

and there you have it ladies and gentlemen, the magic of "licensee boss" to perturb, cajole, and coax and tease out the intellectual beast that is hidden in the financial adviser of today.

well said. "licensee boss" is fiction, to help you all think for yourself.

well done. rest well, my job for today is done until we meet again. nuke'em duke.

Well done Licensee Boss, I must admit you had me going there for a while. Very clever and keep up the good fight.

Of the +30 years I've been in this game, 23 were though 2 different large licensees. It always started nice, then a bank would come and take over and from then on things would change dramatically. Firstly in the 23 years I NEVER saw an adviser being backed when it came to any sort of complaint. Protecting your AR's from ASIC or AFCA? Rubbish, the adviser is fed to the wolves. One large practice the year before was national practice of the year. Our experience towards the end was that the entire focus was on risk elimination at all cost, even to the client's detriment. I fully agree with FASEA on this.

AR's get fed to the wolves if they don't sell enough of the licensee's inhouse product. "Big writers" on the other hand have their compliance failures swept under the carpet. It's a crazy system where compliance supposedly intended to protect consumers, can be weaponised to exploit consumers. And that idiot Hayne further entrenched this ridiculous model.

don't worry about the law. that's not the real law. the real L.A.W. IS what your licensee says is LAW, wanna dispute it? have you got the balls (I'll do a breach report then good luck your livelihood and reputation are all lost, whadda you gonna do report me to ASIC or take legal action? ha).

so don't try anything fancy or tell me what the law is especially now you are all getting antsy after passing da fasea xam (or else we'll report a breach) follow our process and don't worry about these associations. they don't know what they are talking about.

if you follow your licensee's business process, you will be safe. yes, it's over the top but what do you want. you wanna pay personally? go ahead make my day.

Its amazing how everytime snippets come out about the exam, it shows how little is actually based on actual ethics, and your financial knowledge...which was the point of the stupid thing in the first place.

Have to laugh at Amelia Constantinidis lecturing us on reading the act. When studying for my FASEA exam, I found something that was impossible to do (guidance explained something that just simply could not be done), raised it with her, and her response "that's not the intention of it". I responded with, "excellent, but that's what it says". Did it get changed - no. Did these clowns at FASEA actually read and understand their own documents - unlikely....

she has a bachelor of computing science and worked for AMP for 10 years (in separate spates). what qualifications does she have. just go back to coding something stupid.

Pretty ironic that someone employed at AMP would be employed by a body that aims to lift industry standards.

Employing someone who spent years at AMP would be the last thing I would do but that's pretty representative of the outcome I guess.

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