Industry bodies across banking and financial services have welcomed the government’s announcement of a new body, the Financial Adviser Standards and Ethics Authority (FASEA), charged with governing the conduct of professionals in the financial advice sector.
The Minister for Revenue and Financial Services, Kelly O’Dwyer MP, on Monday appointed Catherine Walter AM as Chairperson of the FASEA for a four-year period, as well as naming the Board’s eight appointed directors.
Walter is a director of the Reserve Bank of Australia’s Payments Systems Board and a Director at Australian Foundation Investment Company. She has previously served on over 15 boards since 1993, including the ASX, NAB and the Financial Reporting Council.
In a statement O’Dwyer said the FASEA would be responsible for governing the conduct of professionals in the financial advice sector, by setting mandatory educational and training requirements, developing and setting an industry exam, and creating a Code of Ethics that all advisers will be required to adhere to.
The new requirements will commence on 1 January 2019. From this date, new advisers will be required to hold a relevant degree before they are eligible to commence a supervision year and to sit the exam.
Existing advisers will have two years, until 1 January 2021, to pass the exam and five years, until 1 January 2024, to reach a standard equivalent to a degree. The Code of Ethics will commence on 1 January 2020, with all advisers being required to adhere to the code from that day forward.
The FASEA board will primarily be responsible for:
- ensuring the financial viability of the authority, and setting strategic objectives for the authority;
- approving the education standards for financial advisers, the exam and the model code of ethics;
- appointing the CEO, and holding the CEO to account.
The Minister also announced the appointments of eight Directors to the FASEA board varying between two and three-year terms: Deborah Kent, Carolyn Bond, Mark Brimble, Matthew Rowe, Catriona Lowe, Simon Longstaff AO, Steve Somogyi and Michael O’Neill.
The Australian Bankers’ Association welcomed the announcement, with ABA executive director – Retail Policy Diane Tate describing the new body as “an important step on the path to create financial advice as a trusted profession”.
“The standards setting body has a good mix of expertise in education and ethics, consumer advocacy, and financial services,” she said. “The financial advice banks and AMP, which represent only around 38 per cent of the financial advice market, are helping to fast-track the introduction of the new professional standards framework by funding the establishment of the standards setting body.
“There is lots that needs to happen to get the new professional standards framework in place; not just by the standards setting body, but by banks and other financial advice businesses and financial advisers.”
Commenting on the announcement, Dante De Gori, CEO of the Financial Planning Association of Australia, said the FPA had long advocated for raising education standards and ethics for all financial planners.
“We congratulate the Government on the appointment of FASEA’s board as it has the breadth and depth of experience necessary to approve the education standards for financial advisers, the exam, and the model code of ethics. We are pleased to see that two CFP professionals have been appointed to help develop this framework,” he said.
“We look forward to working with the new body on setting the new standards. Once introduced, they will provide assurance to consumers that their financial planner will be highly trained, experienced and subject to an enforceable code of ethics.”
The Financial Services Council (FSC) said it looked forward to working with FASEA to get the new regime up and running ahead of the 1 January 2019 start date.
“There is a lot of work to do ahead of the 1 January deadline, not just to set the standards and publish the Code of Ethics but also to ensure that advisers have time to complete and meet the new requirements,” said FSC CEO Sally Loane.
“The next step will be for FASEA to appoint the CEO and a lean and efficient Secretariat as soon as possible to enable stakeholders to work through the detail of the new education and professional standards requirements.”