Let’s call a spade a spade. The establishment of the Financial Adviser Standards and Ethics Authority (FASEA) was a well-intentioned and much-needed action on the part of the Government but FASEA itself has struggled and is still struggling to effectively deliver on its mandate.
The corollary of FASEA’s struggles is that the organisation cannot and does not boast the confidence of the financial planning industry. Indeed, key financial planning stakeholders such as the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) have firmly pointed to their disappointment at outcomes, not least and most recently the guidance around the FASEA code of ethics.
Then, too, the Government has tacitly acknowledged the failings of FASEA by signalling that it will seek to legislate to extend the timeframes available to advisers to meet the FASEA exam requirements because of the time taken by the organisation to put the relevant structures in place.
Little wonder then that during last month’s Senate Estimates hearings, Queensland Liberal Senator, Amanda Stoker saw fit to give FASEA’s chief executive, Stephen Glenfield, a grilling about the authority’s actions around matters such as the recognition of continuing professional development (CPD) and the likely consequent exodus of experienced financial advisers.
And let it be said that it was not unreasonable for a senior public servant such as Glenfield to assert that FASEA was simply implementing Government legislation as it is required to do – something Money Management described as “the Nuremberg defence”.
Glenfield is right. It is FASEA’s role to implement the Government’s legislation – the Corporations Amendment (Professional Standards of Financial Advisers) Act 2018 – by setting education, training and ethical standards for licensed financial advisers. What he might also have explained to Senate Estimates, however, is that the level of flexibility and discretion which is exercised in the pursuit of that legislative objective is very much the responsibility of the FASEA board.
When the relatively new Assistant Minister for Superannuation Financial Services and Financial Technology, Senator Jane Hume announced that the Government would seek to grant advisers an extension around the FASEA exam, she might equally have asked her own advisers why that had become necessary and whether the FASEA board should be called to account.
On the face of it, the FASEA board appears balanced with an independent chair, a couple of academics, two financial adviser representatives, an ethicist and two consumer representatives. However, as anyone who has sat on a board will know, capable leadership is necessary from the chair if forceful and politically-motivated personalities are not to dominate. Can the minister be satisfied that adequate and effective leadership has been shown?
No one should want FASEA to fail. The underlying concept of an independent, Government-mandated body tasked with setting and overseeing the education, training and ethical standards of financial advisers is vital to ensuring that an industry becomes a profession. And nor should anyone seek to wind-back from the FASEA minimum standards of Bachelor (or higher) degrees. These, too, are necessary.
However, in June 2020 it will have been three years since formal establishment of FASEA and three years and two months since the appointment of the original board by the former Minister for Revenue and Financial Services, Kelly O’Dwyer.
In all the circumstances, the current minister might consider a review of the FASEA board’s performance and effectiveness and whether the best interests of both consumers and advisers might be served by some new appointments including the chair.
