Financial advisers at war over plans to lift standards

As the financial advice industry comes under fire at the bank inquiry, a war over new education standards has erupted.

 

As the bank inquiry unveils an unprecedented string of financial advice scandals, the industry is at war with itself over new education standards.

A major effort to introduce new qualifications from the professional standards agency, FASEA, is being strongly opposed by industry representatives. Meanwhile, the inaugural chief executive of the agency has stepped down after less than seven months in the job.

Launched with some fanfare by the government — and chaired by a doyenne of company directors Catherine Walter — FASEA (Financial Advisers Standards and Ethics Authority) was charged with “raising education, training and ethics among financial advisers”.

But CEO Deen Sanders, who started in September, quit his post a little over a week ago just as the agency’s new education guidelines were being made public.

A financial advice leader, Professor Mark Brimble of Griffith Business School, has been drafted in to carry the position but his tenure is only on an acting basis — the agency has hired executive search agency Egon Zehnder to find a replacement for Sanders who FASEA says will “continue his long standing career in professional standards”.

As FASEA moves to stabilise the agency and its agenda, veteran advisers are complaining their years of experience are not considered under the new rules. Moreover, the peak financial planning body — the Financial Planners Association (FPA) — is mounting a public campaign to review the FASEA standards planned by Sanders which include that all financial advisers will need to have a Bachelor’s degree in a relevant field and must also pass formal ‘bridging’ exams.

Though the profession is under fire with recurring evidence of gross misconduct particularly within the major banks and insurer AMP, the FPA has been stepping up its opposition to the new rules claiming they ignore or downgrade a range of existing qualifications in the advisory sector.

Ironically, the new rules had been announced in an attempt to clean up the poor education standards in the financial advice industry, a sector in which an easily obtained qualification tagged ‘RG 146’ had been sufficient to work.

The FPA is seen as the peak body of financial planning — the majority of its members are graduates (60 per cent) against an industry average of 35 per cent.

At the heart of the FPA’s concern is that Sanders-era FASEA did not recognise a degree called the Certified Financial Planner designation which is seen as the peak credential in global financial advisory services. The qualification in Australia is managed in Australia by the FPA.

According to the FPA, up to 7,000 planners around Australia have now raised concerns that their qualifications — often the CFP degree — are not given sufficient recognition under the proposed rules.

Dante De Gori, the CEO of the FPA, says the group will now be advocating strongly for study completed by his members to be recognised by FASEA.