FASEA exam acknowledged as a culling mechanism
The Association of Financial Advisers (AFA) has acknowledged that the financial adviser exam set by the Financial Adviser Standards and Ethics Authority (FASEA) will act as a culling mechanism for advisers who are “fundamentally inadequate” but has urged that advisers be given more time to prepare.
As well, the AFA has urged the adoption of a special provision for a minimum of six months transition to allow advisers who fail the exam to arrangement the sale of their businesses or transfer their clients to another adviser.
In a submission recently filed with FASEA the AFA said it supported the need for an examination to confirm all ongoing advisers had an acceptable understanding of the core requirements of being financial advisers.
“We also envisaged that it was a mechanism that would remove those who are fundamentally inadequate and that this was something that was in the best interests of their clients, the community and the financial advice profession as a whole,” the AFA submission said.
However, it warned that some financial advisers, particularly older advisers, might not have sat exams for years and might find the exercise challenging, and in these circumstances it would be important for FASEA and others to assist advisers for sitting the exam.
The AFA submission said that the proposed time-frame for the exam was short and reliant on everything having been built and available before the middle of 2019.
“We believe that FASEA and the Government should look at potential solutions to address this problem and provide advisers with more time to study in preparation for undertaking the exam,” it said.
“There will be particularly significant consequences for advisers that are unable to successfully pass the exam within the required timeframe,” the submission said. “They may be in a position where they sit the exam and are awaiting the final outcome, yet get the news in December 2020 that they have still not passed the exam. This would virtually result in an immediate need for them to cease operating. This would work to the disadvantage of their clients who would be left without an adviser at such short notice.”
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