One of the biggest concerns in financial advisory circles at the moment surrounds the proposed new education standards being formulated by the Financial Adviser Standards and Ethics Authority (FASEA).
The level of hostility and angst was perhaps best expressed by some delegates at the SMSF Association National Conference in February who were looking for the room where then-FASEA chief executive Deen Sanders was to present. In reference to the session, they not so politely inquired where the lynching was about to take place.
And to be honest, who could blame them? So far the best that can be said about FASEA is that it has all of the hallmarks of a government initiative in the way it’s gone about the task through lack of communication and an apparent disconnect with the sector involved.
Sanders’ plenary session at the conference was the first time advisers had heard the current state of affairs from the horse’s mouth and, as such, it was eagerly anticipated.
But alas I’m sure all and sundry agreed it was one of the most disappointing presentations you could attend, leaving far more questions unanswered than answered. If anything, I got the feeling practitioners were more anxious after hearing from Sanders than they were before.
Shortly afterwards, FASEA released its proposed minimum education standards for new entrants and existing advisers. While in some respects it has perhaps put the minds of some existing practitioners at ease as the level of additional education they will be required to undertake is perhaps less onerous than first thought. But that doesn’t mean there isn’t a lot of work left to be done.
One aspect in particular stands out to me and that is the authority’s blinkered approach to the task of ultimately raising financial planning to professional status, evidenced through its obsession with its code of ethics.
Just about every situation an existing adviser finds themselves in right now will require bridging education that includes the FASEA Code of Ethics. Let’s take, for example, a current adviser with a related degree and a related postgraduate qualification. This would be a person who perhaps has an accounting degree and has achieved a certified practising accountant (CPA) or chartered accountant professional designation.
Under the new proposal, an individual in this situation would have to complete one bridging course subject by 1 January 2024, that being the FASEA Code of Ethics.
Having achieved CPA status myself, one of the five modules I had to complete along the way was ethics and the role they played in being part of a profession. Is it really then necessary to make a CPA legitimately providing licensed financial advice undertake another course in ethics?
In some ways it’s a little ironic as I’m sure FASEA would have looked at what existing professions have done over the years to determine what financial planning has to do to become a profession. If this is the case, it now would almost lead to a situation where individuals would have to study a code of ethics that was formulated from the code of ethics they had already studied.
It is understood ethics are the cornerstone of any profession and a necessary educational component for practitioners who are yet to study a module covering the subject. But if there are individuals who are already recognised professionals in a related field, do they really need to study ethics on top of ethics on top of ethics?
This to me shows again FASEA has not so far had the ability to raise its collective head to see the bigger picture and how all of the pieces of the puzzle should fit together.
In a further blow to the process, Sanders left the body last month and has been replaced by Mark Brimble. Chopping and changing of key decision-makers before a final result is reached can create a perception of chaos and result in more angst and uncertainty.
We hope this will not be the case and that FASEA can improve its ham-fisted batting average from here on in.