Accounting bodies call for end to adviser exam

In a joint submission to the government on the proposed changes to the adviser exam, CA ANZ and CPA Australia argued that the adviser exam has largely become redundant.

They highlighted that all financial advisers on the relevant ASIC register(s) providing personal financial advice to retail clients have completed the exam. Additionally, many of them have also fulfilled additional education requirements or met other transitional criteria, including the recently introduced 10-year experience pathway.

Furthermore, the bodies explained that as all new entrants to the financial advice sector must be educated to at least AQF level 7, “we believe the exam requirement is no longer required”.

“We encourage the government to introduce amending legislation to this effect as soon as possible,” they said.

The bodies highlighted, however, that while the financial adviser exam remains in place, “we support the amendments proposed by the government in the exposure draft”.

“In particular we believe the quality of the exam will not be diminished if it is all multiple choice,” the accounting bodies said.

“We also think that permitting a wider range of people to sit the exam is also welcome as it may encourage those who have left the industry but have not as yet satisfied all relevant provider requirements, or existing advisers, to sit the exam.”

The exam was part of the financial adviser reforms outlined in the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017, which received royal assent on 22 February 2017 and came into effect on 15 March 2017.

Late last year, the government released draft legislation aimed at improving the delivery and accessibility of the adviser exam.

Among the changes, the government suggested removing short answer questions, an increase in multiple-choice questions, and the removal of the requirement that dictates only provisional relevant providers and existing advisers can sit the exam.

Back in November, prior to the government’s proposal to alter the exam, The Advisers Association (TAA) also called for an end to the exam, saying it has “served its purpose”.

At the time, TAA chief executive Neil Macdonald said the government should consider removing the obligation for advisers to sit the exam, adding that the exam is fast approaching its use-by date.

“The real purpose of the exam, which financial advisers first sat in 2019, was to establish a level of professional competence in the overall population of Australian financial advisers at the time, many of whom did not hold the new FASEA-recognised tertiary qualifications,” Mr Macdonald said.

With anyone intending to join the profession now being required to complete tertiary qualifications at AQF7 level or above, Mr Macdonald said their knowledge is already thoroughly tested along the way.

“Hence the exam should become redundant,” he added.

“In essence, there will be no advisers whose competency needs further testing. The exam therefore becomes an unnecessary additional expense for those wanting to enter the profession, who have already heavily invested in their education.”

However, despite calls from different sides of the financial services industry to scrap the exam in its entirety, the Financial Advice Association Australia (FAAA), the largest adviser association in the country, supports its existence.

Namely, last year, the FAAA CEO Sarah Abood said that the exam still plays an important role but noted that it could become more flexible.

In its submission to the government’s proposed exam changes, Ms Abood said they would make the exam more flexible and more affordable for candidates, which is what the FAAA wants to see happen.

“The FAAA is strongly supportive of these changes, which we hope will encourage more people to attempt the financial adviser exam and enter the advice profession.”