The Financial Advice Association of Australia (FAAA) has backed the federal government’s experienced adviser pathway proposal, albeit with recommendations for greater precision in targeting the measure towards veteran advisers, specifically the inclusion of a sunset clause.
In its submission to the government on the matter, the professional body urged Labor to consider including a sunset clause in the proposed legislation. This clause would provide a 10-year grace period for financial planners or advisers who have taken the experience pathway to meet the educational requirements for existing advisers.
“Consistent with our last submission, we believe that this measure should be better targeted to older advisers, with the inclusion of a 10-year sunset clause. This would represent an appropriate transition for established, experienced financial advisers and planners with a clean compliance record. Otherwise, we will be in a position whereby planners currently in their thirties could continue to practice indefinitely with no further qualifications required,” FAAA chief executive Sarah Abood stated.
“In addition, a requirement to complete the code of ethics graduate level subject would ensure that all practising advisers have a shared understanding and body of knowledge of our legislated code.”
Abood said that the experienced adviser pathway was a polarising topic within the FAAA membership. However, she noted that if the measure were to include a sunset clause and provisions for the code of ethics requirement, a favourable consensus among FAAA members would likely emerge.
“The experienced pathway proposal has divided our profession and our membership. Our most recent survey showed that 50.9 per cent of members are supportive of a pathway and 49.1 per cent are opposed. However, the level of support would grow to 70 per cent if both the sunset clause and ethics unit changes were incorporated,” she said.
“Much of the opposition to this proposal has been focused around the fear that this change will undermine the perception of financial advice as a profession. Substantial changes have been made in recent years to professionalise financial advice, with a big impact on the many who have invested time and money in completing the additional qualifications required under FASEA (Financial Adviser Standards and Ethics Authority).
“Our message to members is that we are a profession and your clients acknowledge this. It does us no service with consumers to create a two-tier system, using terminology that makes no sense to them. Many ‘relevant’ providers are also experienced. Many ‘experienced’ providers will also have qualifications. These points were very strongly made to us by members during this consultation.
“This is why we have also recommended that a distinction between ‘experienced’ and ‘relevant’ providers not be made on the FAR (Financial Advisers Register). It is time for us to come together as a profession and ensure consumers can have full confidence in their financial adviser who is registered and licensed to practice.”