Advisers hoping for an announcement of an extension to the FASEA exam deadline were left disappointed after the Assistant Minister for Superannuation, Financial Services and Financial Services Technology, Senator Jane Hume failed to do so during a widely anticipated speech and the AFA conference in Adelaide this week. The industry remains hopeful however, and the Senator did not explicitly rule out an extension. However, another speaker at the conference, former Foreign Minister Julie Bishop highlighted the reality of where the industry currently sits.
The AFA chief, Phil Kerwin told delegates after Hume’s address that "I think like me you were hoping to hear a positive announcement today. You've heard Senator Hume is listening and the work we're doing around the FASEA deadline is having an impact..I was hoping for an announcement from the minister. But I think we can still be hopeful something's coming soon in that area."
As the Greek myth of Pandora's box illustrates, once the box is open - all that is left is hope.
Speaking to the Financial Standard regarding the possibility of a future extension, Hume Said "I think we can say that we have heard the concerns and some of my concerns around the deadlines are really more about accessibility." So making sure advisers have the ability to access the exam, rather than extending its deadline, would appear to be the priority for the government at the moment.
Hume continued, "...but we're listening to people when they say they're going to have trouble meeting them [the requirements] and we want to make sure we have a really sustainable financial advice industry,"
The Senator said she believed the current exam process was “fair and reasonable” at present and re-iterated that "We don't want to see mass exodus from the industry because of that.”
Regardless of any concern, advisers are leaving the industry at exceptional levels. As our analysis of adviser movements indicate, 2825 advisers have left the industry in the first 6 months of 2019 – a decrease of 11% from the peak adviser numbers on Jan 1 this year. With the IFA reporting news that hundreds of AMP financial planners have received a termination letter from the company this week, it would seem the trend of a reduction in overall adviser numbers is set to continue.
The former Foreign Minister, Julie Bishop was another speaker at the AFA’s conference on Wednesday. While she offered comforting words in support of the financial advice industry and bemoaned negative media coverage, Bishop did highlight the reality facing the industry. Referring particularly to legislation, she said it was just the beginning, with the government now committed to implementing all 76 of Commissioner Hayne's recommendations. "There will be a train of legislation coming down the track that will hit you all," Bishop told the conference.
Bishop said the reputational harm that has been caused by the unrelenting media coverage about certain bad behaviour has tarnished an entire sector of the community.
"A few bad apples shouldn't diminish the quality of the entire crop," Bishop said. While the “bad apples” line does get trotted out frequently and is appropriate in reference to the small minority of individual advisers actually doing the wrong thing – some would question whether that particular idiom holds true across the industry. After all, the Royal Commission highlighted the poor behaviours and practices, malfeasance, unethical behaviour and illegality that was displayed by a range of institutions as well as individuals. Good apples won't last in a rotten barrel.
With “a train of legislation coming down the track" that will hit the industry, the reality is that many advisers will pull up stumps. No amount of wishful thinking or supportive words seems enough to alter that fact.
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Comments4
"The extension has just been announced. It will be interesting to see the impact. Clearly the Govt have seen they had gone too far with their requirements. Now if we can keep insurance commissions in place we may yet be able to survive!"
Ben 16:32 on 30 Aug 19
"The FASEA exam is the tip of the ice-berg. Even if there was an extension, that has NIL bearing on what thousands of advisers are going to do. As usual, the Government, ASIC and up to recently, the Life Insurance Companies, the FPA and to a lesser extent, the AFA, have not listened to, or fully understood that advisers will no longer be the kicking horse for the big end of towns actions. As it stands, there will be a mass exodus of advisers within 4 years and I would think an explosion of class actions against the perpetrators of the disgraceful actions and insane regulations imposed on small practices around Australia. The Government boffins and the big players who hoodwinked and hi-jacked the Life Insurance Retail Industry, will need to either come to their senses, or face multi Billion dollar class actions. "
Jeremy Wright 15:47 on 30 Aug 19
"I doubt we'll see an extension. Hume seems to have made it clear enough where the govt stand. As for Bishop - fancy a politician rolling out platitudes (bad apples/bad media) to an industry at their event. Like a rock band frontman yelling "I love [insert city name here]". Good on her for speaking plainly about the legislation tho. For too long the chiefs have had their head in the sand and kicked the can down the road. Everyone is now wising up and scrambling - and unfortunately advisers once again are the fall guys hardest hit. Shame on those who let it comne to this"
Bad apples aren't the problem 14:45 on 30 Aug 19
"J Hume is just another typical public servant who have fail to see the issue we faced in the industry both from advisers and consumers perspective!!! "
Real people Real advice 14:38 on 30 Aug 19