Following an ASIC proposal to government, the Governance Institute of Australia is calling for advisers to undergo mandatory testing.
The Governance Institute has shown unanimous support for an ASIC proposal to government that would see compulsory testing for all new and existing advisers on tier 1 products (under ASIC’s RG 146 guide, tier 1 products encompass all financial products not held under the tier 2 products, which are subject to lighter training standards) and includes all monitoring and supervision of new advisers; and an online update review for all advisers every three years.
Tim Sheehy, the Governance Institute chief executive (formerly known as Chartered Secretaries Australia) has used the examples of rogue financial planners to express concern about the state of the industry with the comments that,” there are continuing ongoing examples of where rogue financial planning advisers have cost mum and dad superannuates dearly” and “many will never recover from the likes of Westpoint, MIS and, most recently, CBA financial planners.”
Sheehy also added that, “the reality is that the financial advising sector hasn’t stepped up to the plate in terms of ensuring its operatives have the knowledge and skill to provide quality financial advice.”
In 2011 ASIC testing found that the quality of financial advice was at 3 per cent, while 23 per cent were found to be poor, the Governance Institute insists that if the industry wants to be seen as a profession, it is important that “rigorous educational requirements apply.” Furthermore The Governance Institute chief executive has expressed concern that while virtually every recognised and respected professional services body demanded high levels of professionalism of their members, the financial advising sector had failed in this area and ASIC’s proposal for mandatory testing should be adopted.