The closing of the Financial Adviser Standards and Ethics Authority (FASEA) and the movement of its functions into the Australian Securities and Investments Commission (ASIC) and Treasury was not unexpected and indicators it would happen in the next 12 months had already been given.
Association of Financial Advisers policy and professionalism general manager Phil Anderson said while the government had not flagged its decision with the financial advice sector, there were signs it would take place.
“The single, disciplinary body recommendation that came from the financial services royal commission and the fact that FASEA’s funding, which comes from the institutions, was scheduled to run out in mid-2021 were sufficient indicators that something may happen,” Anderson said.
He said this had also been confirmed in the government’s response to the Review of the Tax Practitioners Board where it stated in regard to recommendation 7.1 – which called for a single point of registration and code of conduct – that the government agreed regulatory overlap should be reduced.
“The government is setting up a new disciplinary system for financial advisers …This new system will cover all financial advisers, including individual tax (financial) advisers,” the government’s response stated.
Financial Planning Association chief executive Dante De Gori said while the FPA had no advance notice of the government’s announcement, it had questioned the long-term role of FASEA and its implementation of its standards.
“We have always supported the standards and the principles behind those, but questions remained around the implementation of those standards,” De Gori said.
“We have made public statements around how this has been done and made no secret of our discontent with FASEA’s procedures and processes and the push to reduce the regulatory burden on advisers has been ongoing by many industry participants.”
Following the government’s announcement, a number of industry associations welcomed the reduction in regulatory oversight, with the Institute of Public Accountants (IPA) and CPA Australia noting more was still required to ease the regulatory burden on advice practitioners.
IPA chief executive officer Andrew Conway said: “It was not unexpected that this recommendation would involve rationalising the numerous regulators and standard setters which operate in the financial advice sector and who are at times in conflict with each other.
“However, while the IPA welcomes reform and rationalisation, we urge the government to ensure that Treasury and ASIC are well supported and funded to take over the standard setting and administration functions currently performed by FASEA.”
CPA Australia stated the reduction in the number of bodies regulating financial advice was a good first step towards reducing the regulatory burden on advisers, but “this decision does little to address overlapping, duplicated and sometimes conflicting regulatory requirements on financial advisers”.
“Transferring responsibilities from FASEA to ASIC and Treasury, without wholesale regulatory reform to address these issues, is akin to kicking the can down the road,” the accounting body said, noting that until the cause of extra regulation and compliance was addressed, advice would still remain costly and inaccessible to many people.
FASEA has also made an official response to the government’s announcement, noting it would continue to maintain its functions and had worked hard to set in place the education and professional standards framework required of it under financial services law.
The authority stated it still retained oversight for the administration of the adviser exam and approving bachelor or higher degrees and equivalent qualifications, and that time frames for advisers to pass the exam by the end of 2021 had not changed.
“FASEA has worked diligently to carry out its functions under the Corporations Act to provide a framework for lifting the ethical, education and training standards of advisers,” it stated in its response released late last week.
FASEA said key outcomes of its work included the development and implementation of standards related to education pathways, a professional year for new advisers, continuing professional development, an industry wide code of ethics and the mandatory adviser examination.
The authority has also overseen the successful examination of more than 10,500 advisers across the course of nine exam sittings, to date, on more than 45 exam days and in 600 exam sessions offered in capital cities and in 22 regional locations.
It added it has also accredited more than 70 historical courses, close to 100 bachelor or higher degrees and more than 35 bridging courses, while also assessing more than 500 foreign qualifications for equivalence with a FASEA-approved degree, and recognising prior learning by approving education undertaken to attain a professional designation for six professional associations.
