Latest results proves ‘exam is not testing the right things in the right way’

Local industry group heads have responded to the latest financial adviser exam results which saw just over 50 per cent of candidates pass.

The sittings were the last opportunity for advisers who are operating under the nine-month exam extension to pass the exam.

From 1 October 2022, all financial advisers must have passed the exam to continue to provide personal advice.

“Bearing in mind that those sitting the most recent exams are by definition experienced advisers, the pass rate reflects the concerns we have been expressing for some time that for stockbrokers and investment advisers, the exam is not testing the right things in the right way,” Stockbrokers and Investment Advisers Association (SIAA) CEO Judith Fox told ifa.

Ms Fox also referenced financial services minister Stephen Jones’ recent consultation paper which he said will address the 30 September deadline for existing advisers to pass the exam and continue to provide financial advice, saying that following the deadline, he will ask Treasury to explore how the exam can be improved, such as reducing the number of questions.

Following the result of the latest exam results, ASIC confirmed anyone eligible for the extension who has not passed in any of the three cycles this year will not be able to provide personal advice from 1 October which Ms Fox said “highlights the inflexibility of the existing framework”.

“That inflexibility is why the current consultation on the education standards is so important for the future of the profession.”

Meanwhile, The Association of Financial Advisers (AFA) CEO Phil Anderson noted the 300 advisers who failed the latest exams.

“This is a challenging outcome for these advisers to confront, and we call on their colleagues to do everything that they can to assist them,” Mr Anderson told ifa.

“It is important to note that the one remaining option for those who have not passed is to get off the Financial Adviser Register before 30 September 2022, and then seek to pass the exam at a later point.

“Should they do that, then they would not be able to practice until after they pass, and would need to find an alternative solution to service their clients in the meantime.”

Earlier this month, the Association of Independently Owned Financial Professionals’ (AIOFP) executive director, Peter Johnston told ifa that the industry group was "naturally disappointed" that Mr Jones did not defer the exam until after the 1 October "cliff" date to restructure it in the consultation paper.

However, Mr Johnston recently told ifa that the AIOFP had “not given up” on seeking an extension past 1 October.

“With the ridiculous past degree issue countered by the 10-year rule — thanks to Minister Jones — the big current issue is the exam October 1st ‘cliff’ date. The less-than-four-week time frame between when the results of the ‘last chance’ exam are released by ASIC and the ‘cliff date’ is totally unreasonable for unsuccessful advisers to sell/transition their business,” Mr Johnston said.

“If the exam format changes post October 1st for new entrants, why can’t current advisers that failed be given the same opportunity?”

Submissions for government’s consultation on the adviser education standards are now open and will close on 16 September 2022.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.