The entry-level requirements for the provision of financial advice may soon be lifted from their very low base.
The Australian Securities and Investments Commission (ASIC) is undertaking consultation with the financial services industry on the adequacy of RG 146 as an entry level requirement for the provision of advice, in addition to the ongoing education standards required of advice-givers.
The regulator has been consulting with industry associations including the Financial Planning Association (FPA), the Association of Financial Advisers (AFA), the Financial Services Council and other key stakeholders.
A spokesperson for ASIC confirmed the regulator was seeking feedback on “whether RG 146 is operating in the best way that it can”. RG 146, introduced as part of the Financial Services Reform Act in 2001, has been widely criticised as being too low a hurdle for new entrants to the industry, as well as being poorly monitored.
It has been a point of concern for many in the advice industry that those who meet the requirements of RG 146 — a process that can take just weeks in accelerated circumstances — can provide personal financial advice to consumers.
The chair of the recent parliamentary inquiry into the industry, Labor MP Bernie Ripoll, raised the point that it takes considerably longer for hairdressers to obtain their professional qualifications than financial planners. The resulting Future of Financial Advice (FOFA) reforms proposed by the Government put the industry on notice where education levels are concerned.
One of the objectives of the FOFA package is to improve the professionalism of the industry through new competency standards, but the package made no reference to the entry-level competencies being overseen by ASIC. The Government believes the creation of a Professional Standards Board, as recommended by Ripoll, is a matter for the Government rather than ASIC. As such, a working group is being established to examine professional and ethical standards for advisers.
The FPA has led the call for the introduction of a minimum degree entry requirement for new planners. FPA deputy chief executive Deen Sanders believes there needs to be a distinction between the minimum compliance requirements associated with RG 146 and the education required to become a professional financial planner.
Sanders is just one leader who would like to see accelerated RG 146 accreditation taken out of the industry. He has stated that it is the delivery of RG 146, rather than the standard itself, that presents a problem — with one potential solution being the introduction of “an objective mechanism of assessment at the back end [of RG 146 training], such as an industry licensing examination created by ASIC”.
AFA chief Richard Klipin agreed the current entry standards for the industry were “too low”.
“Collectively, the industry needs to, with the regulator, set the framework and lift standards and therefore lift the professionalism and experience within the industry.”