Advisers must meet higher education standards: FSC

That is the view put forward by the FSC in its submission to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services’ inquiry into proposals to lift the professional, ethical and education standards in the financial services industry.

FSC’s recommendations are in line with the proposal by the PJC to introduce a regulatory model under which government, professional associations, industry and academia would work in partnership.

The new framework would relate to education and training standards for financial advisers providing financial advice on tier 1 financial products.

“Financial advisers must increase their education and training levels to meet significantly higher standards prescribed by an independent standards setting body,” the FSC said.

“The registration exam must form the gateway to the adviser profession to ensure all advisers meet the required standard prior to delivering advice.”

The FSC said in its PJC submission that it was “impractical to mandate that experienced practitioners undertake degree qualifications, due to the significant level of responsibility associated with running advice businesses and servicing existing clients”.

However, the FSC said it was appropriate to recognise that “experienced” advisers had a competency level higher than that of new entrants.

“[It is] practical to test their technical competence via a registration exam to ensure they meet the increased benchmark. We recommend that the registration exam is set at a standard equivalent to an Australian Qualifications Framework (AQF) level seven qualification,” the FSC said.

Further, the FSC said the Financial Planning Education Council (FPEC) should consist of education providers with knowledge of financial advice, experienced individuals with prior experience of the advice industry, an ethicist and an independent chair.