Announcements

14,850 advisers have passed the exam… building consumer confidence in the financial advice industry

Aug 3, 2021Media Releases

MEDIA STATEMENT

FASEA congratulates the 14,850 financial advisers who have sat and passed the relevant providers exam before the end of June 2021 representing close to 70% of active advisers on the Financial Advisers Register (FAR). These advisers have  demonstrated  they have the knowledge and competencies to understand and meet their requirements when providing personal advice to retail customers. This is  a boost for consumer confidence in financial advice and a  milestone in the professionalisation of the financial advice industry.

Background

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 requires that all relevant providers  pass an exam approved by the standards body. The relevant providers exam ( the Exam) is a general exam and is a key component of  parliaments  reforms to raise the education, training and ethical standards of relevant providers and improve consumer confidence in the profession of financial advice.

Relevant providers are classified as those advisers who provide personal financial advice to retail clients in relation to relevant financial products, e.g., financial planners, stockbrokers, SMSF advisers, aged care specialists and insurance risk advisers.

A General exam

The Exam is a general exam that tests practical application by relevant providers on the following 3 basic competency areas that are applicable to a relevant providers role regardless of specialisation:

  1. Legal and regulatory requirements that relevant providers need to comply with when providing financial advice of any type
  2. How financial advice should be constructed
  3. How to provide financial advice in an ethical manner

The exam tests the base level of knowledge that each relevant provider is expected to have to competently provide personal financial advice to retail consumers.

Who must do the exam?

All existing advisers on the Financial Advisers Register (FAR) are considered relevant providers and are required to have passed the Exam by 1 January 2022 if they wish to remain authorised to provide personal financial advice on retail financial products to retail customers.  New entrants to the profession are also required to pass the exam before becoming authorised to provide retail financial advice.

Note The Government has announced its intention to extend this deadline to 30 September 2022, for those existing advisers who have failed the exam at least twice by 31 December 2021. This  extension is subject to legislation passing.

Advisers who provide solely personal wholesale advice (and are not on the FAR), timeshare advisers or those advisers who only undertake execution only transactions are not required to sit the exam as they are not deemed to be relevant providers under the provisions of the Corporations Act.

How often has the exam been offered?

The Exam has been offered 12 times since the first sitting in June 2019. Advisers have had the opportunity to sit the exam in metropolitan cities, regional centres or remotely. To date there have been 31 venues offering 858 sessions available across 5 days for the 12 exam cycles.  In addition since February 2020  remote sitting became an option for regional advisers and since April 2020 became available for all advisers irrespective of location.

To date over 4000 advisers have chosen to sit remotely.

Is the exam fair?

At the conclusion of the May 2021 exam, 16,700 advisers have sat the exam with 14,850 advisers (i.e., 70% of advisers on the FAR) passing,

The pass mark for the exam is aligned to the range of a typical university credit grade and the overall pass rate for the exam, is 89 per cent.

The credit-level standard required to pass the exam reflects the minimum level of competency required for professional practice and that all questions are set at a difficulty level that a competent adviser should know.

The high pass rate reflects that the Exam is an achievable exam for competent relevant providers regardless of their area of specialisation.

Stockbrokers have been particularly vocal that the exam is not fit for purpose, FASEA analysis indicated that the pass rate for relevant providers who work for stockbroking AFSL’s is 84% and that 14 of the 20 stockbroking AFSL on the FAR have pass rates above 84%.

FASEA also notes  that experienced advisers with a bachelor’s degree or higher have a pass rate of 92% compared to an 80% pass rate for those advisers without formal education. This outcome is consistent with parliament’s view that all relevant providers should hold a bachelor’s degree or higher qualification and supports the vision of the impact of lifting education standards.

Who writes the exam?

The Exam is administered and marked by an independent, third party with deep experience in running professional high-stake exams across a range of professions in Australia and internationally. The exam administrator engages a range of industry experts to write, review and mark questions. All exams are psychometrically analysed to ensure that there is equality across each exam.

Each exam contains at least 70 questions split between at least 64 multiple choice questions and at least 6 written responses.

What if an adviser fails?

Unsuccessful advisers may re-sit the exam within legislated timeframes. An adviser who sat the first exam in 2019 has up to 8 attempts to pass the exam before the exam deadline.

FASEA provides access to a wide range of resources to assist advisers in their preparation including curriculum, reading guide, practice exam questions, pre and post exam webinars and feedback with their results available through the ACER exam portal or the FASEA website.

When can I do the exam?

FASEA is offering sittings in September and November ahead of the 1 January 2022 requirement for existing advisers to have passed the exam.

Subject to legislation passing parliament, from 1 January 2022, ASIC will have responsibility for delivery of the Relevant Providers exam.

FASEA commends the 14,850 advisers who have passed the exam and for those advisers who have not yet undertaken or passed the exam, FASEA encourages you to register early to maximise the number of opportunities to sit the exam and to utilise exam support resources on the FASEA website.

For further information  go to www.fasea.gov.au/examination.

The Financial Adviser Standards and Ethics Authority Limited was established in 2017 to set the education, training and ethical standards of financial advisers in Australia.

 

 

The Financial Adviser Standards and Ethics Authority Limited was established in 2017 to set the education, training and ethical standards of financial advisers in Australia.