Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
FASEA exam extended nine months*, waiting period waived
The Federal Government’s sympathy for the under-pressure financial advice industry was exhibited once again this week, with Jane Hume, the Minister for Financial Services, delivering an unexpected extension of impending FASEA deadlines.
Before the announcement, all registered financial advisers were being forced to sit a comprehensive ethics and general practice exam before 1 January 2022 or lose their ability to directly advise clients.
While a number of loopholes had been raised, such as the ability to remain within an advice practice but not provide advice and attempt the exam again in 2022, the changes are expected to see a near-halving of the 24,000 strong workforce by 2023.
Unfortunately, this comes at the same time that the need for financial advice has never been greater. Baby Boomers are retiring in droves, low interest rates are forcing retirees out of term deposits and most worryingly, investment scams are booming amid the stay-at-home orders.
In a series of recent announcements, the Federal Government has now extended the deadline for passing the FASEA exam to 30 September 2022 but with a significant caveat. The extension will only apply to those who have already failed the exam twice. According to research by the regulator, just 24% of the 1,727 advisers who failed the latest exam had done so twice.
The passing of this exam for the remainder of the industry, which is no mean feat according to the falling pass rate of 69% in the most recent round of exams, has no doubt been complicated by the growing NSW outbreak and mass shutdowns. Yet, in another positive move, the regulator has also removed the three months ‘waiting period’ that was previously required and had the impact of reducing the bi-monthly exam options to quarterly only.
For those still waiting to sit the exam, the latest correspondence from the authority highlighted that the biggest issue it is seeing is the reliance of advisers on “licensee policy” rather than on the direct application of the Corporations Act.
