The Federal Government will this week make its announcements on cracking down on financial adviser standards.
Financial Services Minister Kelly O’Dwyer will create a new independent standards body with broad powers to maintain professional standards for financial advisers.
“This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector,” Kelly O’Dwyer says.
The body will include installing a code of ethics and will be funded by the big four banks and AMP, and the funding model into the future will be arranged by the Government and industry working together.
A new set of standards for financial advisers will also be put through Parliament as legislation later this year.
Those within the industry say the body will need to be properly funded and resourced with the right people to work, and it will need to focus on entry, education and experience requirements of potential financial advisers.
The body will develop a national industry exam to ensure new advisers have passed a minimum standard of content and process knowledge and in combination with advisers needing a degree or degree equivalent, will push the sector closer to achieving profession status.
Setting a code of ethics will be another difficult task with plenty of grey areas and will need the assistance of professionals associations and independent bodies to monitor and enforce the code of ethics, all of which will be approved by the Australian Securities and Investments Commission.
Currently, financial planners can sit the basic RG146 regulation to gain their qualifications, a process that can be done in eight days with open-book, unsupervised testing.
Serious concerns have been raised about this low-level of education required by financial planners when Australian families can trust them with so many important financial decisions.