Is time running out for FASEA extension in 2019?

11 November 2019

With just two sitting weeks of both houses of Parliament left until the Christmas/New Year adjournment, it now seems likely that the Government will not introduce the legislation necessary to extend the Financial Adviser Standards and Ethics Authority (FASEA) timetable until next year at the earliest.

The Assistant Minister for Superannuation, Financial Services and Financial Technology, Senator Jane Hume announced on 30 August the Government’s intention to legislate to extend the FASEA exam timetable but, to date, the necessary amendments have yet to show up on the Parliamentary business timetable.

What is more, there is still a question mark hanging over whether the legislation will gain the backing of the Federal Opposition to ensure its passage through the Parliament.

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Hume announced at the end of August that the Government intended legislating to grant advisers sitting an additional year (to 1 January, 2022) to complete the exam and two additional years (to 1 January, 2026) to meet the broader FASEA qualification requirements.

However, in the absence of the necessary amendments, FASEA has made clear that it is bound to apply the current regime which requires advisers to have sat and passed the exam by 1 January, 2021 – effectively little more than a year.

Parliament will not resume sitting in 2020 until the first week of February and will only do so for five weeks before the Budget.

Both the Association of Financial Advisers (AFAs) and the Financial Planning Association (FPA) lobbied hard for the FASEA extensions.

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Surprise surprise!! The exam is nothing more than taking part in a dog and pony show to make the Government look like they have done something to benefit consumers. This aspect of the FASEA requirements is the biggest joke, alongside the Code of Ethics that have been slapped together once again to look good! I support the Bachelor degree standard aspect though!

So, announcement on 30th August of the intention to legislate the extension.
It will very soon be pushing toward nearly 3 months since the announcement and Minister Hume well knows the chronic state of advisers concerns and stress with the significant and constant overlay of regulation upon regulation.
The minister very rapidly needs to deal with 2 issues.
1. The extension to the FASEA exam completion & the extension for degree requirement.
2. The diabolical outcome from the wording surrounding FASEA Code of Ethics Standard 3.
Get this done right now Minister Hume and at the very least provide some form of breathing space to advisers who have been suffocating under the weight of relentless over regulation for decades.
In so many instances, the advisers have worn the significant impact of the large corporates foray into financial services.
The legislative and regulatory overreach is killing the access of ordinary Australians who need quality, personal advice at a reasonable cost.
A Code of Ethics is of course important, but not when it doubles up as an unreasonable and restrictive regulatory document designed to steer remuneration models rather than simply ensure the basis of ethical advice delivery is achieved.
Whilst FASEA hide behind what they are "required to deliver ", there lies an insidious and dark purpose behind the wording of Standard 3.
This is not only a document governing the ethical process of advice but a document also designed to cleanse a contingent from financial services.
It is not ethical to have a document that appears to be one thing, but deceptively and deliberately designed to do another.
In fact, it is manifestly unethical.

I agree wholeheartedly Agent 86. The only thing I would change in your comment, are the words ' a contingent'. I think 'the vast majority' would be more accurate. I'm not sure many advisers will survive if all asset-based fees and life insurance commissions are switched off on 1 Jan, as required by FG002 (p17). Stephen Glenfield can try and spin this all he likes, but ASIC will be reading the Code word for word and they will bully dealer groups and super funds into switching off adviser remuneration and then sadly it will be game over for 'the vast majority'.

Hi , are you and Agent 86 saying that the interpretation of Standard 3 they will take is that asset based fees for example, are not incidental to the advisers dominant purpose in providing advice? I think/hope that may be a bit of conspiratorial thinking. The second part of that para is more vexing - you have to show a product's effect on the client value is greater than that offered by ANY other option - the difficulty being value won't be known until the future and there will nearly always be another option better than yours in the future - you won't always be at the top. They seem to be relating the standards to platforms. Many advisers have portfolios constructed of managed funds under platforms, and yet they don't seem to imply they are worried about the whole portfolio, just the platform.

Here is a direct quote from FG002 (ie. FASEA's official guidance on the Code of Ethics):
'You will breach Standard 3 if a disinterested person, in possession of all the facts, might reasonably conclude that the form of variable income (e.g. brokerage fees, asset based fees or commissions) could induce an adviser to act in a manner inconsistent with the best interests of the client or the other provisions of the Code'
There you have it. Banned. There may be an argument for a hopelessly conflicted adviser working as a salesman for a product provider, on a fixed salary. But for a self-employed adviser, they clearly breach standard 3. What angers me the most, is that FASEA have disguised the ban in a tricky, convoluted sentence that many advisers will misunderstand until one day ASIC forces their dealer group or the product provider to switch off the revenue, destroying the adviser's business. The behaviour from FASEA is utterly contemptible

No, it says MIGHT reasonably....and then it is silent on whether an asset based fee is an inducement to act against the clients best interest. THis is the subjective liability that another poster was talking about. I disagree it explicitly bans it.

The headline should read "Is time running out for FASEA?" The whole industry and arms of government (Ministers, Treasury & ASIC) are all aware of the issues to do with FASEA's mismanagement and the so-called Code of Ethics Guidance could be the final nail in the coffin. It says a lot about the level of dissatisfaction with FASEA when industry participants suggest that they'd prefer ASIC to run the show. FASEA - "Find Another Standards & Ethics Authority".

Is it possible to be a member of the FPA under the code of conduct. I don't believe it is, particularly if your an FPA board member running an advice business. If the FPA gets a payment from a licensee owned by a product manufacturer, let's say AMP or CBA Financial Planning and then the FPA provided me a webinar or an annual conference where my entrance fee is subsidised and I use a certain product aligned with those companies, don't I have a conflict of interest. I'm thinking to avoid this I will resign to be safe and go to a body that does not get these payments called the professional partner program.

A) Stephen Jones has said Labor will support it.
B) the Government has said for months it'll be introduced in the Corporations Act amendments Bill in February.
Both these things have been made clear.

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