I imagine that the Professional Standards Body established by the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 will be very busy. In addition to consulting (or appearing to consult) with an industry resentful of their very existence, the Standards Body must (after consultation)
i. approve bachelor or higher degrees (equivalent and relevant qualifications);
ii. approve the exam;
iii. set the requirements for work and training;
iv. set the CPD requirements;
v. specify a word or expression to refer to a provisional relevant provider;
vi. make a Code of Ethics.
The exam and "apprenticeship" requirements may, for the Standards Body, prove to be their equivalent of a "land war in Asia" but they do have precedents on which to draw. They also have legislation, and statements of legislative intent, on which they can rely to impose change.
The issue of continuing professional development is, however, a trifle vague. It's clearly important. The Act imposes an obligation on Licensees to determine their CPD Year (calendar year, financial year or any equivalent period) and to notify ASIC of their choice. It reinforces the Licensees' obligation to monitor CPD by tying it explicitly to their obligation to ensure that their representatives are appropriately trained and competent. It establishes an obligation on Licensees to notify ASIC when their representatives fail to meet their CPD obligations.
Frustratingly, it doesn't define "Continuing Professional Development" or construct adequate parameters from which we can infer their interpretation. Instead, it's left to the Standards Body to determine.
In all likelihood, we'll be presented with, at best, a slight variation of the 30-40 hours or points that has been the industry standard since the introduction of Policy Statement 146 (the ASIC Policy that threatened, but ultimately failed, to transform the industry). There may, and indeed should be, restrictions on the type of training that qualifies as CPD and the organisations that can provide it. While these desirable changes may reduce the number of advisers that attend complementary breakfasts and product launches, they are unlikely to significantly change adviser behaviour or improve adviser competency.
The Standards Body has an enviable opportunity to transform our industry by changing what is acceptable CPD. I'd urge them to seize this opportunity and I'd offer them seven ways to change Continuing Professional Development to improve adviser capability and competence. For a start, I'd like for us, as an emerging profession, to:
- Admit that successfully answering a four option multiple choice questionnaire does not prove competency;
- Accept that the current CPD regime, with content aimed too-often at the lowest common denominator, is an often-pointless bureaucratic exercise that values form over substance. Effective CPD should challenge and confront advisers;
- Abandon the "CPD is ABC" philosophy that promotes broad but superficial training in favour of learner-driven programs - where learners can make the choice to broaden or deepen their knowledge on relevant knowledge areas;
- Embed ethics, as contextual and practical learning, in all training material instead of presenting it as a distinct and disconnected knowledge area;
- Use technology, such as machine learning, to help guide users to identify their strengths and weaknesses and assist them to either maximise their strengths, mitigate their weaknesses or do both things;
- Take a more multidisciplinary approach for sourcing or developing relevant content; and
- Consider whether our current binary approach to CPD units (pass/fail) is delivering the desirable outcomes. Perhaps CPD should be graded by complexity. Perhaps even a borderline fail on a complex unit demonstrates more competency that a brilliant pass on a simple unit. If we believe that the purpose of CPD is to maintain, update and develop practitioners' understanding then perhaps CPD units should clearly reflect the distinction between confirming, correcting and enhancing knowledge and capability. Perhaps "stretch learning" - CPD designed to challenge, develop and enhance learners' knowledge and capability - should be valued more than 'maintenance' units.
The Act aspires to changing the industry and restoring public confidence in financial advisers. Unfortunately, it will ultimately fail to achieve its objectives unless, or until, the Standards Body facilitates the delivery of real and effective CPD.