The Financial Planning Association of Australia (FPA) has offered to step back from the Financial Planning Education Council (FPEC) to give the council a chance to be recognised as the peak education standard-setting body for the whole financial planning industry.

The chief executive officer of the FPA, Mark Rantall, told a panel session on education standards in financial planning that if the industry fails to demonstrate an ability to set appropriate standards for itself, it is doomed to endless re-runs of the Future of Financial Advice(FoFA) regulatory upheaval.

 “There are no guarantees in life, but rest assured there will be another FoFA unless we grab the nettle now and face into self-regulation, and as an industry stop low-balling standards and set a high water mark and head to where we need to head,” Rantall told the panel session, convened by the continuing professional development arm of Deakin University, DeakinPrime.

“It’s all very well if you want to be regarded as a prospective profession – everybody wants that – but you have to do something for that. There are no free kicks here, and there’s a well-worn path, in the accounting profession.

“This is not rocket science. We know how to navigate this. We have built an infrastructure to implement it. So all we have to do is put that flag on the hill, agree that’s where we’re heading and face into the responsibility of self-regulation and do something about it.”

FPEC was established by the FPA as an independent standards-setting body but its origin and history means it has always been perceived as an arm of the FPA itself. The FPEC charter states that it is “an independent body, with authority to make determinations as to accreditation of university courses in particular and to speak in its own right regarding education standards and accreditation and support of academics and universities, including research”.

Rantall said FPEC “works with 16 or 17 universities around the country, and has set the core curricula”.

“It’s chaired by Dr Mark Brimble from Griffith University, and it has a number of academics on it, along with practitioners,” he said.

“We’ve offered to give that to the industry and step away from it altogether, and have that as the industry curricula-setting body. It’s already done the work, it’s already established. If people do not take that up, we would be bitterly disappointed.”

Rantall said self-regulation on appropriate standards would lead to much better results for all participants in the financial planning industry.

“When you self-regulate you self-regulate with people who understand and know what they are doing in the industry, and provided they do it properly and don’t try to low-ball standards, you end up with a great result,” he said.

“If you leave it to the regulators, the legislators and the government, who know nothing about the intricacies of what we do, you end up with problems: FoFA round one, then a wind-back, then whatever happens from there.

“Part of the solution is for the whole industry – not just us, it requires everybody – to get behind being real about self-regulation and starting to do that – and not managing by press release.”

Dr Adrian Raftery, a senior lecturer in financial planning and superannuation at Deakin University, said his overriding concern was who, if not the industry itself, would make the call on minimum educational standards for financial planners – existing participants, as well as new entrants.

“There’s an incredible overlap of all these different government inquiries going on at the moment,” Raftery said.

“I’m fearful that they’re all passing it amongst each other and they may not address the issue.

“Who’s going to make the decision to say, OK, we need to make change? Then, what is it going to be? Are they going to listen to associations like the FPA and say yes, it must be a minimum degree entry? Then who is going to administer it? ASIC say they don’t want to. FPEC has been mentioned as an option, but if FPEC is an option will they still be seen as the FPA’s little baby, or will there still be other industry body members be allowed to participate in that? Or will it be all academics?

“But the big issue is not so much the new entrants but those who are in it – those who have created the bad publicity, the bad media, the bad thoughts, [who are] why only one in five people seek financial advice because of the bad eggs in the industry. What we going to do with them?

“The industry is littered with a bunch of NIMBYs. Yeah, it’s fine we agree there should be minimum standards, but ‘not in my backyard’ – there’s got to be grandfathering, there’s got to be exemptions.

Clim Pacheco, former general manager of education and knowledge management at ANZIIF, and currently a director of Business Transformation Solutions, said self-regulation is laudable but has some shortcomings.

“Even though I agree on self-regulation, being in a professional body that self regulates, and we try our best to do it, I don’t think you’ve got the teeth to do some things,” he said.

“I see a model like the Tax Practitioners Board [TPB] as probably the closest I would like to advocate for. What they have is a sense of independence, a sense that you’ve got to have education standards, but if you’ve got different standards or different qualification, how many years of experience do you have? And advocate strongly for the practical aspects.

“I think the most important thing for organisations … to do now through the [PJC] inquiry is to stand for something, and advocate strongly for [that].”

Original article published on Professional Planner on 15 September 2014