When releasing the exam results for the October round of the Financial Advisers Exam, FASEA noted a lower-than-average pass rate as well as a depressed turnout.
625 advisers sat the exam in October, which is below the average of 1,540 for previous sittings. Of that cohort, 76% passed - once again below the average pass rate of 83%. FASEA added that 89.5% of the total advisers who have sat the exam to date have passed and that this group now represents 49% of the advisers on ASIC's register.
The lower pass rate in October was attributed to several factors: the smaller number of participants, a higher-than-usual proportion of advisers re-sitting the exam and persistent stumbling blocks in the areas of expertise covered in the exam.
The first area of note in this regard is Financial Advice Regulatory and Legal Requirements, which covers:
The second area that's still proving troublesome for exam participants is Applied Ethical and Professional Reasoning and Communication, particularly in areas concerning the practical applications of the FASEA Code of Ethics.
It’s notable that this remains an issue in exam settings, considering the recent criticism FASEA’s explanatory material for the Code has received. The AFA, for example, argued that rather than clarifying matters, the new guide for the Code "presents additional and unnecessary complexity as FASEA's expectations on certain issues seems to have changed with the interpretation contingent on which document a financial adviser reads."
The Stockbrokers and Financial Advisers Association also noted that this lack of clarity here presents a practical problem for those subject to the Code, as “it will not be FASEA that interprets compliance with the Code” - instead it will be ASIC, AFCA and the courts, all three of which will be able to assess compliance "with the benefit of hindsight."
There are numerous other and more specific complaints about the standards in the Code as it currently stands – including case studies regarding complex family structures, a subject discussed extensively in the latest season of Secrets of the Money Masters. But the overall sentiment appears to be that FASEA cannot fix the current situation through additional guidance documents.
Despite the challenges faced by some advisers in the latest round of exams, though, FASEA CEO Stephen Glenfield said that "nine in 10 [demonstrated] they have the skills to apply their knowledge of advice construction, ethics and legal requirements to the practical scenarios tested in the exam."
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