ASIC’s planner education future
Mike Taylor writes that ASIC chairman Greg Medcraft has laid out how the regulator sees the future of financial planner education – and the challenge will be how the industry deals with it.
If the Australian Securities and Investments Commission (ASIC) has its way then the educational framework underpinning the financial planning industry will change dramatically to one based upon the holding of a suitable tertiary qualification allied to an industry-specific exam.
Further, if ASIC deputy chairman Peter Kell is to be believed, then the approach being contemplated by the regulator has received at least a cursory nod from the relevant minister, the Assistant Treasurer, Senator Arthur Sinodinos.
All of this was made clear to a Senate Economics Committee hearing last month, during which both Kell and ASIC chairman Greg Medcraft spelled out the regulator’s broad agenda on financial planner education – one focused on improving overall planner quality.
As well, Medcraft pointed to ASIC’s support for a national register of authorised representatives capable of allowing the tracing of bad apples.
In the analysis provided by Medcraft to the Senate Committee, the exam could be provided for around $300 a head and would be similar in nature to that offered by the US Financial Industry Regulatory Authority (FINRA).
As it happens, Medcraft has actually undertaken a FINRA exam, as had one of his Senate Committee inquisitors, Tasmanian Greens Senator, Peter Whish-Wilson.
Medcraft revealed that the regulator had done a lot of work on the exam model and believed it could be delivered for $300 a head.
“We would see it the same as the FINRA model. This would be an industry-driven exam. The industry, as in FINRA, would draft the questions, because I am not going to hand it over to an organisation. It has to be owned by the industry and it should be a peer, as FINRA is,” he said.
Medcraft also suggested that the questions contained in the exam would be “practical and really deal with issues that you would face as an adviser”.
“So it should be driven by the industry. It can be delivered across the country in testing stations at $300 a head. That is what I am envisaging. Frankly, I think it would really help a great deal. For $300, it is well worth it for what we have in terms of the savings of our country,” he said.
His deputy chairman, Kell was more specific in detailing how the exam would work and how ASIC saw it dove-tailing with existing tertiary qualifications.
“There are two key issues around ensuring that we have appropriate competency skills and educational levels in the financial advice sector. One is: what is the level that needs to be set? The second is: how do you test that?” he said.
“Our proposal, which we have been consulting on with industry very extensively in the last few months, is that there should be a requirement that anyone providing personal advice has a tertiary qualification and that, in addition to that, to help ensure that you have demonstrated your ability to do that, you would sit a national exam.
“So there is the level, which is a tertiary qualification, and the exam supporting that. The minister has indicated that he is interested in supporting a discussion with the industry about how that can best be achieved, so it is very much on the agenda at the moment as part of what we want to push forward.”
Medcraft suggested that there was another benefit likely to flow from such a national exam and one which he had explored with the US Securities Exchange Commission (SEC) – the ability to “get a level of mutual recognition between the United States and Australia”.
The ASIC chairman said that this would effectively place Australia on the same footing as Canada and streamline access in terms of US capital markets.
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