Financial advisers should boycott the mandatory Financial Adviser Standards and Ethics Authority (FASEA) adviser exam as it is meaningless as a benchmark for entry into the profession and does not prove the competency of a practitioner, according to an adviser representative group.
United Financial Advisers Association (UFAA) chair Alex Vagliviello made the call to boycott the exam, stating it was representative of a number of heavy-handed reforms that unfairly placed the blame for many issues in the financial advice sector on advisers.
“Whilst there’s no denying that the reform that commenced in 2001 was needed, the entire blame for the industry’s failures has been directed at the advisory sector and financial advisers burdened with an unending avalanche of compliance and administrative requirements,” Vagliviello said.
“The findings of the Hayne royal commission into the deplorable behaviour (primarily by the major institutions) towards consumers was yet another example of the government remedying the situation by making advisers the scapegoats.”
He said while the adviser exam, overseen by the FASEA, appeared to have “noble” values and purposes, it did not meet this in reality as the exam was opaque in its application and held no meaning as an academic industry entry requirement.
“Further, it does not bestow an industry accreditation on passing or as a reference to assist consumers understand or appreciate an individual adviser’s competency,” the UFAA stated.
“Insultingly, it doesn’t even count towards an adviser’s annual continual professional development requirement despite the amount of time this exercise entails. Yet failure to pass the exam will end an adviser’s business, putting an end to their livelihood regardless of years of practice and experience.”
Vagliviello said it was for these reasons, and to support its members, that the UFAA was calling for a boycott of the exam and its replacement with a “practical alternative that is both honest, transparent and filled with integrity”.
He added the ongoing education and professionalism reforms had become “draconian, harsh and impractical” and were the result of regulatory overreach, which had made financial advice complex, unaffordable, imbalanced towards institutions and forced the closure of advice businesses and the exit of practitioners.
“Regardless of the narrative put forward by the LNP or Labor, FASEA and the industry is confused and in disarray while overregulated to the point where it is on the verge of collapse,” he said.
“Advisers are in favour of a strong respected sector comprised of highly skilled and appreciated practitioners that attracts a steady stream of graduate entrants seeking career and self-employment opportunities.
“But over the past 20 years the actions of government from both persuasions has resulted in tribalistic outcomes that have benefited the few, that is, large banks, fund managers, insurers and industry funds. All to the detriment of advisers, their businesses and staff.
“Overcome by reform fatigue, advisers are leaving the industry in record numbers, with those remaining under severe strain as their businesses cope with a never-ending deluge of administrative and compliance demands.
“In this sense, the sector finds itself unique in that these confusing compliance demands, when compared to other similar industries, is dissuading new entrants considering a career in financial services.”
In May, the UFAA labelled the government’s unsuccessful efforts to get an extension for the timeframe in which have to complete the exam through parliament as part of its ongoing failure to understand the role of advice and the pressures facing advisers.
