May FASEA exam problem areas highlighted

Financial advice regulatory and legal obligations was the biggest problem area in the results of the May Financial Adviser Standards and Ethics Authority (FASEA) exam, which included financial services guide (FSG) and statement of advice (SoA) documentations, breach reporting, and applying the Corporations Act.

The May exam saw a pass rate of 69%, only slightly higher than the January exam which had the lowest pass rate of 67%.

The exam tested advisers on three areas: financial advice regulatory and legal obligations, applied ethical and professional reasoning and communication, and financial advice construction.

Under financial advice regulatory and legal obligations exam takers underperformed in:

• Demonstrating knowledge of when practitioners were required by law to provide a retail client with key documentation i.e. FSG/SoA;
• Demonstrating knowledge of the components of key advice documentation that was provided to the client;
• Evaluating case studies and identifying breaches of financial disclosure obligations;
• Applying relevant sections of the Corporations Act when identifying responsible provider obligations, including breaches of those obligations; and
• Evaluating client scenarios in terms of legal requirements of privacy legislation.

Under applied ethical and professional reasoning and communication exam takers underperformed in:

• Identifying sources of judgement and biases and their influence on financial advice; and
• Effectively applying the FASEA code to various client scenarios and identifying compliance and non-compliance.

Under financial advice construction exam takers underperformed in:

• Demonstrating an understanding of advising on complex family structures in constructing the advice.

Existing advisers had until the end of 2021 to pass the exam, although advisers who failed twice could re-sit up until September 2022.

There were three more sittings for 2021, with registrations only available for the last two, and advisers would only be able to sit one of those two sittings due to the three-month rule.

Over 2,700 advisers had booked for the July exam while 230 had booked for the September exam.

Registrations for the September sitting would close on 20 August, while the November exam would see registrations close on 15 October.

No 2022 exam dates had been announced yet and FASEA would not be responsible for the exam in 2022 as this would be transferred to the Australian Securities and Investments Commission (ASIC).

2021 FASEA exam dates and locations

Source: FASEA