“Whoo-hoo-hoo, look who knows so much. It just so happens that your friend here is only MOSTLY dead. There’s a big difference between mostly dead and all dead. Mostly dead is slightly alive. With all dead, well, with all dead there’s usually only one thing you can do.”
— The Princess Bride, (1987), Twentieth Century Fox
Is RG 146 (as we know it) dead?
Knowledge. Skill. Experience. Competency. Capability. Professionalism.
One of the most dramatic, and most poorly understood, of the financial planning industry’s sprint towards professionalism is that progress, in its unseemly haste, has left behind the regulatory standards that made its sprint possible.
Unfortunately, 18 months into the age of FASEA, no-one’s entirely sure whether RG146 “Licensing: Training of financial product advisers” was simply left behind or trampled to death in the mad scramble towards professionalism.
RG146 is still hanging around but seems largely irrelevant. We’re frequently asked “Is RG146 dead?”. The reality is that RG146 is mostly dead, but perhaps active enough to cause anxiety.
RG146: In memoriam
Many of you would be awfully familiar with RG 146 Licensing: Training of financial product advisers.
Others may be entirely oblivious and wondering why we still need RG 146.
It certainly seems in need of urgent repair with large sections under review and no longer applicable. It’s so cluttered with irrelevancies and redundancies that we thought the best approach was to take a chainsaw to the guide, Ash-style, and delete the content made mostly dead by introduction of the various Corporations Determinations and related FASEA Policies.
The results were alarming.
Our chainsawing removed approximately 7,087 words relating to Financial Advisers providing personal advice to retail clients:
- Initial training standards for financial advisers providing personal advice to retail clients could be cut because these requirements were replaced by Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2020 and FASEA Standard FPS001 Education Pathways Policy
- Continuing professional development content for financial advisers providing personal advice to retail clients was replaced by the Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018 and FPS004 (FASEA CPD Policy)
- The old ASIC training register was retired in September 2012 .
Before we cut it down completely, we still have 10,212 relevant words, and they relate to:
- Advisers providing general advice on: Tier 1 products; Tier 2 products other than basic deposit products and related non-cash payment products and basic deposit products and related non-cash payment products;
- Customer services representatives providing financial product advice in the course of their work;
- Responsible Managers and continuing professional development obligations.
The role of Regulatory Guides
At this point it is worth positioning the role of regulatory guides.
Regulatory Guides merely re-interpret the law and provides guidance to regulated entities. ASIC interprets the law and provides practical guidance to regulated entities so that they may decide how to meet their obligations.
Regulatory Guides do not constitute legal advice and, in fact, ASIC urge you to seek your own professional advice. The legal requirements are enshrined in the Corporations Act and related instruments.
The most contentious issue with regards to RG 146, relates to continuing professional development and whether the specialist knowledge areas and skills are still relevant.
Are specialist knowledge areas and skills still relevant?
The short answer is no.
And we once again need to come back to first principles.
Continuing professional development is about maintaining the competence to provide financial services (s912A(1)e)) and you are now attaining competence at an Australian Qualifications Framework Level 7 (or degree level).
It flows that CPD must change to maintain the level of competence you are now required to attain and maintain.
Effective 1 January 2019, CPD for financial advisers providing personal advice to retail clients, moved out of RG146 and into the Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018 and FASEA CPD Policy (FPS004) and from this date you were required to:
- Commence operating under FPS004 (40 hours + 20 for transition and aligned to the FASEA competency areas)
- Update the Financial Adviser Register with your CPD Year start date
- Update the Financial Adviser Register if an adviser has failed to meet their CPD obligations (came into effect November 2019)
- By 1 March 2019, each Licensee was required by law, to have a compliant CPD Policy and compliant individual CPD Plan for each adviser as proscribed by Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018 and FPS004
Whether you are an existing or new adviser CPD as outlined in RG146 is no longer relevant, but it still hangs around.
As we have written about previously, you are officially now from this day, fourteen days away (assuming your CPD Year runs to 30 June) from needing to have logged 60 hours of CPD under FASEA’s CPD Policy.
By 30 June 2020, incorporating the FASEA CPD transition period, and consistent with FPS004, you will need to:
- Demonstrate ongoing professional practice competencies (i.e. Technical; Client Care & Practice; Regulatory Compliance & Consumer Protection and Professionalism & Ethics);
- Ensure that 70% of the CPD hours have been approved by the Licensee;
- Training content has sufficient intellectual or practical content;
- Training content primarily deals with matters relating to the provision of financial product advice, financial advice services and financial advice business;
- Training is led or conducted by 1 or more personal who are appropriate, and have sufficient standing, expertise, academic qualifications, and/or practical experience;
- Training enhances your knowledge and skills in the areas that are relevant to the provision of financial product advice and financial advice services
- Evidence learning outcomes that were set the beginning of the learning and verify that those outcomes were achieved.
Let’s hope that we’ve all stayed on top of this obligation, and we do not see a spate of attestations being made with regards to non-compliance.
The last thing an emerging profession needs is a number of non-compliance entries on the Financial Adviser Register.