The creation of an independent standards body in Australian financial services will make the professional standards transition a tougher, but ultimately a clearer and easier system to comply with, according the Financial Planning Association.
Speaking at the Sydney Financial Planning Association (FPA) roadshow, as reported by Financial Standard, the FPA chief executive Dante De Gori said that unlike the Australian Securities and Investments Commission (ASIC), in its current capacity, the standards body will bring in a new register of approved education providers, meaning that all training organisations will have to comply with tougher guidelines or risk not being approved.
The new body will also have the ability to audit the financial education providers and use their discretion to determine if an adviser has met their RG146 requirements.
“In the heart of the framework is a brand new independent body that doesn’t yet exist,” said De Gori (pictured) “Why do we need a new body? I’ll give you an example of why we need a new body.
“I had a member approach me with a dilemma: they’ve gone to ASIC to apply for a new licence, they submitted with their licence and their qualifications. They had a Masters in Financial Planning, CFP, and degree in economics, they also had been practicing for 12 years and ASIC asked them if they were RG146 compliant.
“The reason is that ASIC do not, from an education perspective, and have not done now since approximately 2012, hold a register of training courses that tells them that those courses map back to RG146.”
The move is part of a series of changes to improve financial services education in the region. Last week, the new minister for financial services, former assistant treasurer Kelly O’Dwyer, confirmed all new advisers will need to sit an exam, complete a professional year and then comply with a code of ethics from 1 January 2019, even after passing a relevant degree.
Existing financial planners
De Gori told attendees at the event that existing financial planners will not need to complete a bachelor’s degree but may need to upskill if they currently only hold a diploma or advanced diploma.
“The minister has confirmed that no existing financial planner will be required to complete a bachelor’s degree,” he said. However, in saying that the requirement is that you must demonstrate that you have training and qualifications that are degree or equivalent.
“What I will say is that for those of you that your highest level of training and qualifications is an advanced diploma or diploma you will be required to do further studies. The educators will be looking to issue bridging courses and solutions around that and what you can start doing to take you up to a qualification that is degree or equivalent.
“For existing planners relevant degrees can be quite broad, we’re looking at economics, accounting, finance, commerce and business related degrees are all likely to be completely accepted as relevant. Whether your arts degree is or not, I suppose that will be another question and will be decided by the independent body.
“They’re going to be very broad and very liberal for accepting degrees for existing planners.”
De Gori added that the independent body will not only establish a curriculum but will also have the power to audit education providers to ensure their degrees remain compliant with the curriculum.
“This independent body is going to take that role of working out what that curriculum is and what RG146 is actually going to look like in the future – hopefully it won’t be called RG146,” he added.
“It’s really important to understand that this independent body will have that auditing power and will maintain a register for existing and future planners who are looking to do degrees and courses that map back to the requirements. They can look at the register and be comfortable and confident to know that those courses will be recognised, that there won’t be questions asked.”