Last week, we discussed the joint statement from Treasurer Josh Frydenberg, Assistant Minister for Superannuation and Financial Services and Financial Technology Jane Hume announcing FASEA's closure.
In its stead, "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.
Responding to the change, FASEA issued a statement saying it has worked "diligently to carry out its functions under the Corporations Act to provide a framework for lifting the ethical, education and training standards of advisers." The statement also listed the development of seven adviser standards, the successful nine exam sittings so far and accreditation of a wide range of degrees and qualifications as major accomplishments.
Shadow Minister for Financial Services Stephen Jones, a frequent FASEA critic, described these changes as "another chapter" in the Government's "bumbling attempts to bring order to the financial advice industry." He said winding up FASEA was a tacit admission of "abject failure" and that Government had "bungled the development of standards tests for financial advisers at the very time the Hayne Royal Commission was shining a spotlight on the need for an overhaul of a workforce which was struggling to make the transition from a salesforce to a profession."
With many of FASEA's responsibilities now being assumed by ASIC, though, the question is: will the regulator do a better job?
According to a statement from the Institute of Public Accountants, this depends on funding from Government. IPA CEO Andrew Conway explained: "It was not unexpected that this recommendation would involve rationalising the numerous regulators and standard setters which operate in the financial advice sector, and who are at times in conflict with each other. Winding up FASEA was always going to be an option."
He continued: "[W]hilst the IPA welcomes reform and rationalisation, we urge the Government to ensure that Treasury and ASIC are well supported and funded to take over the standard setting and administration functions currently performed by FASEA. Regulation is dependent on proper execution."
It's difficult to establish the extent to which "proper execution" can be achieved at this stage, though, especially given lingering uncertainty around ASIC's leadership and whether James Shipton will be reinstated as chair in the new year.
Moreover, the (seemingly) sudden transferring of FASEA's duties to the regulator and associated expansion of responsibilities seem at odds with deputy chair Karen Chester's recent comments that the "the recent past of an ASIC imploring Government for new regulatory powers and better field coverage is just that: the past."
Chester said it was time for ASIC to "simply get on with it," something that may prove challenging once it fully takes over administration of Australia's financial advice professional standards system.
In the interim, it appears the advice industry will be operating under further uncertainty - at a time when people are increasingly concerned with protecting their income, building wealth outside of property and understanding diversification.
The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here
And just like that, the Government announced FASEA will be disbanded. Wh....
The regulator is currently consulting on changes to RG256 and what "assu....
10 December, 2020
And just like that, the Government announced FASEA will be disbanded. What does this mean for you, and how does it support the broader advice refor....
08 December, 2020
The regulator is currently consulting on changes to RG256 and what "assumptions" can be used in the client remediation process.
03 December, 2020
An upcoming investigation into adviser remuneration may have adverse affects, according to a new report.