Ethics CPD requirements ‘insulting’ to advisers

In accordance with the Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018, Australian financial advisers are required to complete a minimum of 40 hours of continuing professional development (CPD) a year.

Included in these 40 hours, advisers are required to complete at least five hours of technical competence, five hours of client care and practice, five hours of regulatory compliance and consumer protection, and nine hours of professionalism and ethics.

For many within the advice profession, the professionalism and ethics requirement has become a contentious issue. Speaking with ifa, Esther Althaus, managing director and financial adviser at Perspective Financial Services, said the requirements reinforce the idea that advisers require ongoing training in order to act ethically.

“It’s insulting, and when you look at other professionals and you see what financial advisers have gone through, and then are still required to do, it continues to plant a seed and to reinforce that advisers cannot be trusted, or can only be trusted if…,” Althaus said.

“I think that it’s doing the public a disservice, number one, and it’s doing advisers a disservice.”

A large portion of advisers’ complaints stem from the fact that they are required to complete nine hours of ethics CPD while other professions have significantly lower requirements, such as lawyers with only one hour a year, or accounts with six hours every three years.

“When you have professions, different professions, who have such a vast discrepancy of how many points they’re all required to do, it plants a seed to the public that we cannot be trusted in the same way,” Althaus said.

“We cannot be trusted the same way as lawyers, because we’ve got to do nine times as much ethics every single year. We can’t be trusted as much as, I don’t know, accountants, engineers, whatever other professions are required to have ethics.

“It sets us apart and sends a message already to the public that we can’t be trusted in the same way. And everything that we’ve gone through in the last several years, the additional studies, which now might be redundant if you’ve been practising for 10 years, the exam, all those bits and pieces, that’s brought us, supposedly, to an even playing field with other professionals.”

Another key complaint is that many CPD activities, while they may provide an hour of CPD, for example, only part of that may go towards the ethics requirement, meaning they end up doing more hours than necessary as they work towards meeting the requirements.

“I’ve done 90 points this year, but I still haven’t satisfied my CPD requirement, so now I’ve got to, what, take off a day, or spend two hours every day for a little while, just to tick the boxes?” Althaus said.

Appearing on an episode of the ifa Show last month, Helen Baker, financial adviser and owner of On Your Own Two Feet, shared a similar sentiment, arguing that the CPD requirements for advisers are “quite rigid”, leading advisers to spend an excessive amount of time meeting said requirements.

“Obviously, we don’t want to be doing it to a point where we become incompetent, but I think advisers kind of know where they need to get their professional development hours up and learn,” Baker said.

“I know one year I ended up doing like 70 hours of professional development because it wasn’t under that particular category or it crossed over, only part of it was on that category. So, you’re doing bundles and bundles of hours on certain things that are not there.”