The much-anticipated extension to the FASEA exam was finally announced late last Friday afternoon. Along with a one-year extension to complete the FASEA exam, it was also announced that advisers registered prior to Jan 1 this year will have an extra 2 years to meet FASEA qualification requirements. This is potentially the more notable extension, as it will give advisers debating their future a further 2 years to solidify their plans. The co-operation between different industry bodies has been generally applauded – and we may see much more of it with the consortium of organisations joining forces in creating a new entity - Code Monitoring Australia (CMA) and applying to ASIC to be a FASEA code-monitoring body.
In a media release, the Minister for Superannuation, Financial Services and Financial Services Technology, Senator Jane Hume announced that under the new requirements, advisers who were registered on the Financial Adviser Register on 1 January 2019 must:
- Complete the FASEA-approved exam by 1 January 2022 (one additional year); and
- Meet FASEA’s qualification requirements by 1 January 2026 (two additional years). These changes will not apply to new advisers registered after 1 January 2019.
It was expected that the exam extension would be announced in Hume’s speech to the AFA last Wednesday, but perhaps not wanting to be seen as favouring that organisation over others, the announcement came late Friday afternoon.
Hume’s statement noted that currently the exam has not been available in regional areas until this month and that the extension of the exam would ensure that all advisers, including rural and regional advisers, would have two years to sit the exam, as originally intended.
“The extension of the qualification requirements will assist working parents, including those taking parental leave during the transition period, to have sufficient time to meet the requirements, maintaining a diverse adviser industry,” she said. In response to the announcement, Labor shadow minister for financial services Stephen Jones criticised the government, citing the Hayne Royal Commission has specifically criticised a lack of professional standards as a major concern. "The government are being negligent and dragging their feet on urgent reform," Mr Jones said. Politics…
The unified lobbying efforts of the AFA and FPA with regards to the exam extension have been compared to that of the mortgage industry, whose members successfully put aside their differences to will concessions for brokers following the conclusion of the Royal Commission earlier this year. AFA chief executive, Phil Kewin, referred to this collaborative effort in response to the announcement, saying “This was the collaborative effort where, in conjunction with Dante De Gori and FPA Australia, and our respective members who actively engaged their local politicians, we achieved a great outcome for all advisers, their clients and the many Australians who need and deserve financial advice. One message, many voices - that’s united.”
The unity may be a prelude to further extensive co-operation between the associations, with the FPA and AFA being part of a consortium of advice organisations who have lodged an application with the Australian Securities and Investments Commission (ASIC) to constitute a FASEA code-monitoring body. The group - also including FINSIA, the SMSF Association, Stockbrokers and Financial Advisers, and Boutique Financial Advisers – made an application earlier this month for ASIC approval for a new entity, Code Monitoring Australia (CMA), to conduct this role.
One of the key new standard requirements for financial advisers is to be a member of an ASIC-approved code monitoring scheme. Initially, it was mooted that potentially several “monitoring bodies” could exist and that they would report back to a new body, which would receive serious compliance concerns and “be responsible for the registration, monitoring and sanctioning of financial advisers,” according to the royal commission roadmap. But the actual operational process in this area is yet to be settled on.
The consortium looks to be hopeful that they would become the sole agency responsible for this role, saying at present there seems to be the potential for regulatory duplication in the area – obviously something that no one wants.
Dante de Gori, CEO of the FPA said it was unclear whether Code Monitoring Australia would become the new single disciplinary body, or whether it would be something else. “There is uncertainty about it, we don’t know what the future will be,” he said. “We welcome the government proceeding with code monitoring, but we need clarity what it means beyond 2020”.
Are advisers going to have to pay for membership of any potential code monitoring bodies – or will they be funded by government or included in licensee or industry membership fees? The code monitoring issue is just another area of confusion and uncertainty facing advisers that will have to be worked through in the milieu of changes that have emanated from the Royal Commission.
The dust will settle...eventually.