The new education and training standards to be put in place under the Financial Adviser Standards and Ethics Authority (FASEA) regime from January 2019 present challenges for those who predominantly provide self-manager super fund (SMSF) advice under a limited licence, a technical manager has claimed.
The criticism follows last week’s release by FASEA of a consultation paper on the adviser examination that will be in place from January 1, 2019, which completed a suite of position papers from which a broader initial view of the new education and training standards for advisers could be formed.
According to wealthdigital technical manager, Rob Lavery, the hope that advisers under limited Australian financial services licenses might avoid the full suite of training and education requirements is fading.
“Unlike RG146, the standards enforced by FASEA, as they currently appear, do not scale up and down according to your speciality or licence class,” he said.
“FASEA’s proposed guidance on new qualifications pathways for existing advisers split requirements into three categories. Advisers with no, or an unrelated, bachelor’s or postgraduate degree will need to do a full graduate diploma.
“Those with a related bachelor’s or postgraduate degree, such as accounting, will have a three-subject bridging course to complete. Those with an approved planning degree, or a related bachelor’s degree and post-graduate qualification, will have a single subject on FASEA’s code of ethics to complete.”
Lavery said many accountants who provide limited advice on SMSFs will find themselves required to do a one or three-subject bridging course.
“Those who have been in the industry the longest may need to complete the full graduate diploma,” he said.
Also, Lavery criticised what he described as the “rigours” of the new exam.
“FASEA’s consultation paper on the adviser exam noted that 80 per cent of the adviser exam will be on non-strategic areas. For the most part, the exam will focus on Corporations Act rules, FASEA’s own code of ethics and the application of ethical thinking and behavioural finance,” he said.
“All advisers, including those under limited AFSLs, will need to pass each section and achieve an overall mark of 65 per cent or higher.
“The exam is proposed to be three to four hours, will be a mix of multiple choice and short-answer questions, and will require significant preparation for all candidates. Existing advisers will have until January 1, 2021 to pass the exam.”
Lastly, Lavery said all advisers, including those under limited AFSLs, would need to subscribe to a code-monitoring body under the new regime, which he said would result in increased cost and regulatory requirements for those providing advice.