With the release of the latest results for the FASEA adviser exam, the pass rate for the total number of advisers on ASIC's register has reached 57%.
On the other hand, the January exams saw a drop in the pass percentage (down to 67%) compared to the average from previous exam rounds (78%) along with reduced participation (1079 advisers, compared to an average of 1323). FASEA noted that January's unsuccessful candidates will receive "additional individual feedback" on areas of underperformance.
The reduced participation is notable given the urgency of the situation – those advisers who haven't passed FASEA's exam by 2022 will be ineligible to practice. What's also notable, though, is the reoccurring theme that compliance with (and practical understanding of) FASEA's Code of Ethics is a key stumbling block for exam participants.
Along with financial advice construction and regulatory/legal obligations, the subject of Applied Ethical and Professional Reasoning and Communication was highlighted as an area some of January’s participants were struggling with. FASEA listed the specific exam question areas as being:
In the past, confusion around the code has been called out by industry figures including AIST CEO Eva Scheerlink (who argued there’s insufficient clarity regarding intra-fund and scaled advice) and FPA CEO Dante De Gori, who said that “financial planners and even the public are confused about which standards should be followed – those in the Code of Ethics set by FASEA or those in Corporations law set by the Australian Parliament.”
The last time FASEA provided further guidance, the AFA said it presented “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 (SAFAA) also noted the practical problems with this ambiguity, given that it won’t be FASEA who interprets compliance with the code, but rather ASIC, AFCA and the courts.
The SAFAA’s statement seems rather prescient now, given that FASEA is in the stages of being wound up and responsibilities for adviser professional standards will be split between Treasury and ASIC.
From now on, who’s going to be responsible for ensuring the code is sufficiently clear for those advisers who have to adhere to it?
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