Treasury proposes internal training for ‘qualified advisers’

With the debate regarding the level of education “qualified advisers” should have ongoing, ifa has learnt that Treasury officials proposed training provided by institutional licensees as the desired minimum education requirement for employees of superannuation funds, banks and insurers.

ifa earlier learnt that Treasury is hosting roundtables to debate the specificities of various parts of the government’s response to the Quality of Advice Review (QAR), including the idea of “qualified advisers” – employees of institutions permitted to provide personal, simple advice.

While Financial Services Minister Stephen Jones earlier floated the possibility of a diploma as the minimum requirement for the new class of advisers, it now appears that this diploma was envisioned as one issued by the institution employing the “qualified adviser”.

“On qualifications, as the name suggests, they will be required to meet a government-mandated education standard,” Jones said in December.

“The exact level of education will be determined in time, but a minimum standard of a diploma may be the right balance to be less onerous than the requirements for professional advisers.”

Speaking with ifa, Lionel Rodrigues, who is an expert adviser on legal, compliance and advice issues for the Association of Independently Owned Financial Professionals (AIOFP), said that members of Treasury came to the table with the idea of internal training.

Rodrigues, who attended the roundtable focused on the role of “qualified advisers” told ifa: “It started off by Treasury having a view that internal licensee training would be obviously advantageous or certainly desirable.”

“Then the topic went around, ‘Well, should we then have formal qualifications?’ That was where it was starting to head, and I think that's probably fair enough.”

The minimum desirable level of qualification that was settled on, he said, was diploma level – Australian Qualification Framework (AQF) 5.

“They've been talking about not charging fees or receiving commissions, etc and the discussion was about having licensee supervision and the recommendation of a minimum education level of AQF5,” Rodrigues said.

According to Rodrigues, there was a sentiment among those present at the roundtable that “AQF5 was reasonable for a product information provider”.

“They would have a level of corporate training, but that could be enhanced by the fact that they would have some formal training consistent with the Australian Qualification Framework,” he said.

This diploma level of education would be broadly in line with the pre-FASEA education requirements outlined in RG 146.

Concerns about the adequacy of RG 146 were raised as far back as the 2014 parliamentary joint committee inquiry into proposals to lift the professional, ethical and education standards in the financial services industry, when the Professional Standards Councils said the introduction of RG 146 had prompted a proliferation of education providers and a “massive flight to the bottom”.

Following the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 passing Parliament, the standard was raised to a minimum of a relevant degree at the AQF 7 level – a bachelor’s degree or higher.

In fact, in his final report, commissioner Kenneth Hayne said that the prevention of poor advice begins with education and training.

“I believe that, as they come into effect, the new education requirements will improve the quality of advice that is given, and improve the way that financial advisers manage the conflicts of interest with which they are faced.”

Rodrigues did, however, caution that the outcomes of the roundtables do not necessarily provide an accurate representation of the draft legislation that will be released for broader consultation, as it still needs to go through the “bureaucratic sausage machine”.

Contacted for comment on the qualification levels, Financial Advice Association Australia (FAAA) chief executive Sarah Abood told ifa: “Our strong position is that there needs to be a minimum legislated education level, which must be commensurate with the level and type of advice given and be able to count towards a full advice degree.”

There has been considerable speculation about the level of education that these “qualified advisers” would need to meet since Minister Jones first announced the creation of this new class of advisers last year.

Speaking with ifa earlier this month, Ben Marshan, founder of Ben Marshan Consulting, said his preference would be that the new class of advisers hit the AQF 7+ level.

“My personal preference would be to see a way that they will probably hit that AQF 7–8 level so that there was a pathway to move them to be holistic if they wanted to over time, but you don’t necessarily have to do everything,” he said.

“Two to four subjects depending on your specialisation, one in financial services, one in professionalism, one or two in the specific knowledge areas you need, seems about right.”