FSI Final Report was delivered on 7 December 2014, and the Turnbull Government last week responded to its recommendations. The responses will map an agenda to improve Australia’s financial system and build on existing Federal Government policy.

In the view of Hewison Private Wealth, the government’s response to FSI is very encouraging in many areas.

Protection of the term Financial Planner / Financial Adviser

After years of advocacy by the Financial Planning Association (FPA), the government has committed to restrict the use of the terms ‘financial planner’ and ‘financial adviser’ under the Corporations Act to those listed on the Australian Securities and Investments Commission (ASIC) Financial Adviser Register. This is undoubtedly a giant leap forward for consumer protection, and the future of the financial planning profession.

Professional Standards, Education and Ethics

Hewison Private Wealth has long supported increased professional standards for the financial planning industry, as emphasized through many of our previous blogs.  

The government has agreed to support FSI recommendations that improve trust and confidence in the financial planning profession, including:

• Raising of education standards for financial planners to a relevant tertiary degree, for all new advisers
• Financial planners will be required to pass an exam, complete continuing professional development (CPD), subscribe to a code of ethics and undertake a professional year
• Implementation of appropriate transition arrangements for existing advisers
• The establishment of an independent education standards body will be recognised in legislation
• ASIC’s Financial Adviser Register will be improved to include relevant bans and disqualifications or code breaches.

In our view, the current low education standard required for an individual to classify as a financial planner or adviser, has been a primary cause of poor advice to consumers as well as a key contributing factor in holding back financial planners and advisors from recognition as a profession. We are confident that this change in education requirements will help elevate the unfair perception, and provide us with the recognition we deserve. 

One area of continued concern however, is the improved education standards have been introduced for new advisers only. In December 2014, ASIC proposed a national competency exam for all financial advisers, and while we do not oppose existing tertiary qualified advisers being exempt from such an exam, detail of what the exam will contain has not been released. We urge the government to wait for its introduction before confirming that its introduction will satisfy a heightened standard.

Overall, we are delighted by the Federal Government’s response to the FSI and its agreed changes. Hewison Private Wealth’s vision has been to provide a model of industry excellence and to see an increase level in education standards across the board. These changes will go a long way to improving the reputation of financial planners and advisers in Australia, and to improve the trust of Australian consumers.