The Financial Adviser Standards and Ethics Authority (FASEA) has pushed back against recent complaints that its mandatory adviser exam was unfair, claiming high pass rates across different adviser segments refuted that criticism.
In an update on its website in which it congratulated the 14,850 advisers who had passed the exam by the end of May, FASEA stated the “pass mark for the exam is aligned to the range of a typical university credit grade and the overall pass rate for the exam is 89 per cent”.
“The credit-level standard required to pass the exam reflects the minimum level of competency required for professional practice and that all questions are set at a difficulty level that a competent adviser should know,” the authority said.
It added the high pass rate indicated the exam was achievable for “competent relevant providers”, regardless of their area of specialisation, and took specific aim at claims by stockbrokers it was not relevant for them.
“Stockbrokers have been particularly vocal that the exam is not fit for purpose,” it said.
“FASEA analysis indicated that the pass rate for relevant providers who work for stockbroking Australian financial services licensees (AFSL) is 84 per cent and that 14 of the 20 stockbroking AFSLs on the [Australian Securities and Investments Commission] Financial Advice Register have pass rates above 84 per cent.”
Earlier this year, FASEA chief executive Stephen Glenfield also referenced the high pass rates as evidence the exam was suitable for use across the advice sector.
The authority also pointed out the exam was general in nature and tested the practical application of advisers in three competency areas that were applicable to their role, regardless of specialisation.
The three areas are the legal and regulatory requirements advisers must comply with when providing financial advice, how that advice should be constructed and how that advice should be provided in an ethical manner.
“The exam tests the base level of knowledge that each relevant provider is expected to have to competently provide personal financial advice to retail consumers,” it said.
“FASEA also notes that experienced advisers with a bachelor’s degree or higher have a pass rate of 92 per cent compared to an 80 per cent pass rate for those advisers without formal education.
“This outcome is consistent with parliament’s view that all relevant providers should hold a bachelor’s degree or higher qualification and supports the vision of the impact of lifting education standards.”
In total, 16,700 advisers have sat the exam to date, with the 14,850 successful examinees representing 70 per cent of advisers on the Financial Advice Register.
