In a joint statement with Treasurer Josh Frydenberg, Assistant Minister for Superannuation, Financial Services and Financial Technology Jane Hume announced that FASEA is no more.
The beleaguered professional standards body, which recently came under cross-industry criticism for its guidance on its Code of Ethics, only came into effect about two years ago. Since then, FASEA has endured leadership shuffles, criticisms about the practical applications of standards and, like everything else, challenges associated with COVID-19, including administering regular adviser exams in a fully remote environment.
Of course, there are also the challenges faced by the industry itself, which ASIC conceded has been bleeding advisers since FASEA’s introduction. The Government recently appeared to be taking notice of these issues, with Assistant Treasurer Michael Sukkar expressing support for regulatory simplification and cutting red tape.
Criticism has been ramping up in the Opposition, too, with Shadow Assistant Treasurer and the Shadow Minister for Financial Services Stephen Jones recently describing FASEA as being "built wrong from the ground up" and saying that "these Liberal failures have caused tremendous difficulties, crushing small businesses and ordinary financial advisers beneath confusing and contradictory reforms."
So, with FASEA now being wound up, what is the Government’s new agenda for professional standards in advice?
Per Senator Hume's statement, the "standard-making functions" of FASEA will be transferred to Treasury, with standards being "set by legislative instrument". FASEA's remaining functions - including the exam - will be moved into the Financial Services and Credit Panel (FSCP) within ASIC.
To facilitate this, the FSCP is being expanded and will also now become the "single, central disciplinary body" for advisers as recommended in the final Royal Commission report. Hume said these changes "will further streamline the number of bodies involved in the oversight of financial advisers."
These changes, Hume added, will address the perennial problem that “most Australians do not access financial advice at retirement due largely to the cost of advice and a lack of consumer trust,” something discussed extensively in the latest season of Secrets of the Money Masters.
Hume also acknowledged "the important contribution made by the Board and staff of FASEA towards improving the education, training and ethical standards in the financial advice sector."
Legislation bringing these changes into effect will be introduced to Parliament in the first half of 2021.
Responding to the news, FPA CEO Dante De Gori said: "The FPA has been calling for a simplification of standards setting and the establishment of a single disciplinary body to reduce red tape and untangle an unreasonably complex regulatory framework that is stifling the financial planning profession and driving up the cost of advice."
He added: “This announcement is a step in the right direction, particularly for financial planners who, in some instances, are struggling to remain commercially viable as the cost of advice has skyrocketed in recent years as regulatory and compliance costs continued to rise."
It’s likely there will be further questions from the advice community as to what the ongoing effects of these reforms will be, especially given how much time and money was spent on getting businesses “FASEA-ready” over the past two years. We will keep you updated as any answers to these issues arise, but in the interim - what are your biggest concerns about a post-FASEA world?
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