The FSI has recommended that the competency of financial advice providers be raised and an enhanced register of advisers introduced.
The Government is currently considering mechanisms to raise minimum education requirements for financial advisers and the FSI recommends that this be prioritised.
The FSI found that the minimum standards are currently too low which affects consumer outcomes, consumer confidence and trust in the sector and can prevent consumers from seeking financial advice. A number of high-profile cases where consumers have suffered significant detriment through receiving poor advice, and a series of ASIC studies, have highlighted this issue.
The FSI recommends that the minimum standards for those advising on Tier 1 products should include a relevant tertiary degree, competence in specialised areas where relevant and ongoing professional development. The current education standards are broadly equivalent to a Diploma for Tier 1 products and to a Certificate III for Tier 2 products. Increased educational requirements would bring Australia into line with standards in place in other peer jurisdictions such as Singapore and the UK.
The licensing system does not currently provide a distinction between advisers on the basis of their qualifications. The FSI recommends the introduction of an enhanced register to facilitate consumer access to information about financial advisers’ experience and qualifications and improve transparency and competition. The recommended register would go beyond the information that is currently available via ASIC. The Inquiry considers that the register should include:
- licence status;
- work history;
- qualifications and credentials;
- areas of advice;
- business structure; and
- years of experience.