Financial advisers to get qualification in ethics

Australian Financial Review May 15, 2019 5.11pm

Robert Bolton

The Ethics Centre is launching a university level course in ethics which will be offered to the new regulator the Financial Adviser Standards and Ethics Authority.

From January entrants to the sector will have to meet new skill and performance standards.

The Financial Adviser Standards and Ethics Authority (FASEA), which was rushed into existence in 2017 on the back of scandals involving mis-selling of financial products, will implement a code of ethics at the beginning of next year.

Ethics Centre director Simon Longstaff said selling financial advice was being moved from a market-oriented industry to a profession and needed a sharp lift in standards to make the jump. From January 1, studying a course in ethics will be a mandatory part of getting registration as an adviser.

"Most professions have evolved slowly. We're asking financial advisers to make the transition in just a few years," Dr Longstaff said.

"Since Adam Smith, we've understood the pursuit of self-interest is good. And so is satisfying the needs of people who want to purchase goods and services.

"But the world of professionals does not only satisfy what people want, it subordinates self-interest in the way a market doesn't require."

New financial advisers will have to pass the course in ethical behaviour before they can get registration.

Dr Longstaff said financial advisers had to engage with clients on complex questions, which inevitably included issues such as family inheritances and personal relationships that went way beyond basic technical skills.

Last year's banking royal commission had a major effect on the sorts of standards expected in the financial advice sector and was one of the reasons FASEA had been pushed into existence so quickly.

"Financial planners realised they had an issue. They have to act in the interest of their client. But to do that they have to be free from conflict of interest," Dr Longstaff said.

"Financial advice competency is not just a technical thing. A financial adviser goes into the homes and lives of people.

"As robo-advice begins to spread, the place of the human in advice giving will be more relevant than ever."

The compulsory Ethics Centre course will be offered through a university, and FASEA said it would accredit other providers of course content in the coming year.