Financial Planning

Specialist oversight ignores FOFA reforms

specialist advisers FOFA

Not recognising specialist advisers ignores the intended outcomes of the FOFA reforms and shows the poor decision-making of FASEA.

The failure of the incoming professional standards and education regime to recognise specialist advisers was due to managerial issues and ran counter to the advice reforms outlined in the Future of Financial Advice (FOFA) legislation, according to an opposition minister.

Opposition financial services and superannuation spokesman Stephen Jones said the lack of recognition of specialist advisers in the Financial Adviser Standards and Ethics Authority (FASEA) education and exam framework was not the fault of the parliament or legislation, but of the implementation of the regime by the authority.

“There has been some poor managerial decisions in the administration of FASEA. It was late to get up, late to get its standards done and promulgated, and the exam process was a rolling train wreck,” Jones said during an address at the AFA (Association of Financial Advisers) Hybrid Conference 2021 today.

“These managerial issues made no difference to the philosophical position [behind the reforms] and it was just good competent management that was not brought to bear.”

He said the government was also responsible for not having proper oversight of FASEA and the “problem got well away from the government before it stood up and said there may be a problem”.

“There was a failure of ministerial oversight and by government and a good board of governance should have picked up the issues coming from industry,” he said.

“They did not have to agree with all those issues, but trying to ram everyone through a very small funnel of financial advice without looking at other aspects of the profession was a mistake.”

The FOFA reforms, which provided the basis for the FASEA regime, recognised specialist advisers as well as the need for industry-wide standards, he said.

“The philosophy behind the FOFA reforms was to recognise there was a broad profession of advisers and within that there were specialists, and there should be a base of knowledge that everyone is required to have made up of ethical principles that should apply to everyone,” he said.

“On top of that base is specialisations and professional qualifications and the exam should reflect that specialisation.

“We don’t need life insurance advisers to know the mechanics of stockbroking and the share market and in the same way stockbrokers don’t need to know how to provide life insurance advice.”

Earlier this year, Jones was critical of the government’s move to fold the tasks of FASEA into ASIC and Treasury, stating it had done so because it had lost control of the authority and the shift was an admission it had mishandled the situation.

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