In what looks like a massive blow for its credibility, ASIC, according to The Australian, bowed to industry lobbying and abandoned plans to significantly upgrade the educational expectations and standards of Australia’s financial planners.
“The nation’s nine key finance industry lobby groups — including the Financial Planning Association, the Australian Bankers’ Association and the Financial Services Council — all co-signed a private letter to the Australian Securities & Investments Commission late last year, calling on it to suspend its detailed plans to improve education in the sector,” The Australian reports.
ASIC’s plan under consultation papers 212 and 215 was seeking to improve educational standards over five years for planners, determined by the products they were advising on.
For Tier 1 – the more complex products – advisers were to hold an advanced diploma of financial planning by January next year while they would need a “bachelor degree equivalent” by January 2019. Less complex Tier 2 products would need advisers to have a diploma of financial planning by 2019.
That seems like a fair proposition given that planners are entrusted with advising on Australia’s multi-trillion dollar pool of savings and a certain level of academic understanding of investment theory, markets, economics and statistics. An ability to understand exactly what they are selling, not just what it says on the wrapper of the prospectus or PDS, would seem best practice.
But, the group of nine, while ostensibly supporting better education standards, said that new standards should be “holistic” rather than “considering distinct elements in isolation”.
Citing consumer access and price of advice the group said:
By raising the training standards across all forms of financial product advice and across all classes of financial products, it is unclear how the industry is expected to provide innovative advisory services, including ‘scaled’ personal advice,
Not to put too fine a point on it but perhaps increased educational standards might have protected consumers from naive tax-driven investments like Timbercorp and others that have collapsed over the years. Perhaps higher educational standards are simply an intellectual hurdle that Australian superannuants and other investors might be able to expect from the advisers on their savings.
At a time when ASIC is crowing about their chase for interest rate “riggers” and wants to send these criminals to jail, this news that they went soft on financial planners – the advisers of Australia’s savings pool – is an own goal for Australia’s corporate regulator.
The complexity of economies, markets, demographics and statistics is little different to the law or accounting and tax rules.
Would you see a lawyer or an accountant without a degree? I wouldn’t.
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