Industry body blasts ‘discriminatory’ exam processes

Stockbrokers and Financial Advisers Association chief executive Judith Fox told ifa the failure rate across major stockbroking firms for FASEA’s November exam was extraordinarily high and demonstrated the need for different specialisations to be better recognised within the new education standards.

“It was up to 65 per cent [failure rate] across some of the different firms, because the exam had two-thirds of the questions on insurance,” Ms Fox said.

“We have protested that with FASEA and said ‘please don’t do that again’. It skewed everything in terms of the pass rate because so much of the exam was on a topic that stockbrokers just do not get involved with.”

Ms Fox said the current educational framework did not take account of the multidisciplinary nature of the advice industry and was too general in its approval of degrees as well as its construction of exam questions.

“FASEA has a view that financial planning is the only form of financial advice and they’ve treated it as the core education, when in fact financial planning is itself a specialisation,” she said.

“So stockbrokers, investment advisers, accountants, risk advisers have all struggled because their specialisations aren’t recognised by FASEA.

“That is also showing up in the education requirements where degrees that are most suitable for our industry, such as Bachelor of Commerce or Economics, are not approved degrees – the only degrees approved are about financial planning.”

Ms Fox said the standards authority had been needlessly heavy-handed in its approach to approving qualifications, and it was hoped the government could take a “more nuanced” interpretation when it took over FASEA’s standards-setting responsibilities later this year.

“At the moment, someone who graduates with a Bachelor of Finance from Sydney University is considered less qualified to work in the investment industry than someone with a Bachelor of Property majoring in Financial Planning from Central Queensland University,” she said.

“But when you look at the legislative instrument it doesn’t specify financial planning – that particular focus is coming entirely from FASEA.

“We hope that Treasury will have a more nuanced view of the specialisations that exist within advice. Ultimately we want clients to get the advice they are seeking and to know people have been properly qualified and educated in those specialisations.”

However, a spokesperson for FASEA said exam pass rates among the stockbroker community more broadly had been strong.

"As stated by Senator Hume, there has been an average pass rate of 84 per cent across the stockbroking industry for the nine exams held to the end of 2020," the authority said.

"Results vary by firm, with half the stockbroking firms performing at or above the industry average for both the November exam and exams in total. The exam does not test specialist knowledge. Rather, it requires advisers of all types to apply general knowledge of legal and regulatory requirements, ethics and client behaviours that apply to all advisers to a range of scenarios."

Want more content on advice strategy? Register here for ifa's Business Strategy Day 2021.