The impact on the financial advice industry of the introduction of FASEA legislation continues to be felt. The pass rate of the latest FASEA exam fell to less than 80% with seven out of 10 current advisers yet to take the test. Uncertainty over possible deadline extensions beyond the end of this year to pass the exam is increasing pressure on advisers to decide whether they will remain in the industry. It’s adding to the industry’s turmoil and the effect on adviser numbers is also having flow on consequences throughout the industry with reports that the Financial Planners Association (FPA) would make up to eight of its staff redundant.
The FPA is expected to announce a restructure as the large number of exits from the financial planning industry is likely to impact its overall member numbers. Our continuing analysis of adviser movements indicates a 15% drop in overall adviser numbers in the 12 months to the end of March this year. There has been much criticism of the association from advisers disgruntled with the perceived lack of performance and impact the FPA has wielded in recent times, in particular regarding the introduction of FASEA. The redundancies are indicative of how much FASEA is impacting the financials across the industry, in this case particularly the membership base of the FPA. One adviser, who spoke to us on the condition of anonymity regarding the FPA announcement lamented that it could be the "beginning of the end" for the FPA. Although that may sound a bit dramatic, he mentioned many CFP members he had spoken to would leave the industry as they felt the designation had been devalued and there was a lack of willingness to do more study. The news shows how the impact of the loss of advisers will extend beyond advice businesses and their immediate employees.
The FPA told Adviser Ratings that they would be issuing a media release regarding the redundancies tomorrow morning (Thursday).
FASEA is undoubtably a major contributing factor to industry uncertainty, and its introduction and rollout has been a large bone of contention for many advisers, however, not all segments of the industry see FASEA in a negative light. The contentious FASEA code of Ethics was called a “blessing” for AFCA by the Ombudsman for advice and investment, Shail Singh in a recent piece in Professional Planner. Singh said it provides a clear and transparent marker for AFCA to use during dispute resolution cases and and predicted that “the code along with the other FASEA mandates such as the adviser exam – will ultimately reduce the number of disputes in the financial system”.
Despite this, the hard numbers around advisers sitting and passing the exam remain a cause of concern. On Monday FASEA released the exam results from the fifth Financial Advisers Exam held in April. The exam was held exclusively using remote proctoring (a service that confirms the identity of the test-taker and safeguards the integrity of an exam using an internet-delivered or phone-delivered assessment).
Only 470 advisers sat the exam, compared with 2231 advisers sitting the February exam. The overall pass rate for this exam was down compared to previous results with 79 percent of candidates passing, meaning nearly a hundred advisers from the most recent sitting will have to take the exam again.
FASEA data says that currently nearly 8,000 advisers have sat the exam, representing 35% of advisers listed on the Financial Advice Register (FAR), while the overall pass rate has been 86%, meaning only 30% of advisers listed in the FAR have passed the exam.
It is expected that and extension to the year end deadline will now have the opportunity to pass parliament in June, but if there is a further delay, around 15,000 advisers presently have just four more opportunities to sit and pass the exam, in order to remain practising next year. Registrations for the June exam to be held exclusively using remote proctoring from 11 to 16 June have been extended until 29 May 2020. Currently over 2000 advisers are registered.
Registrations are also open for the August 2020 exam. Subject to COVID-19 restrictions, the exam may be offered in physical locations as well as by remote proctoring. Over 1200 advisers are currently registered for the August exam. October exams will be held from 8-13 October with registration to be opened on 6 July. November exams will be held from 5-10 November with registration dates to be advised.
We’ll be bringing you advisers thoughts on the merits or otherwise regarding FASEA and its impact on the industry over the next few weeks. If you’d like to be heard, you can get in touch with us to have your say by contacting us on firstname.lastname@example.org