“It’s the terror of knowing what the world is about
Watching some good friends screaming
”Let me out!””

— “Under Pressure”, Queen & David Bowie

FASEA June Results

In a previous article I suggested that, compared to the need to complete a FASEA approved degree and the inevitable loss of grandfathered remuneration, the FASEA exam should have barely registered as a concern for most advisers.

My reasons were entirely practical. Any adviser who’s been subject to an effective monitoring and supervision regime during the course of their authorisation, has already absorbed a practical understanding of a broader suite of laws then they will be tested on. This may not reassure institutionally aligned advisers, or those that struggle with examination stress, but it appears validated by recent releases.

“FASEA is pleased with the implementation of the first exam and congratulates successful candidates on completing an important component of their education requirements under the Corporations Act. ”

— FASEA Chief Executive Officer, Stephen Glenfield

On 8 August 2019, FASEA released the results of the June exams and the results have surprised and disappointed the industry in equal measure.

I recommend that you read the FASEA release but, essentially, it simply confirmed that:

• 579 advisers sat the inaugural examination; and
• Over 90 percent of candidates passed.

It’s the high pass rate that has generated the expressions of disappointment and surprise.

• If over 90% pass the examination can’t be as difficult as advisers anticipated (surprise).
• If over 90% of candidates pass, how effective will it be in driving the professionalism of the industry? (disappointment).

These are reasonable responses. A 90% pass rate does appear to be significantly higher than similar jurisdictions. One might also wonder whether the exam was set at the AQF7 level (Bachelor Degree) or at AQF5 level (Diploma).

I’m not too concerned by the initial results.

While I believe that most professional advisers have a sound, practical understanding of the financial services laws and how to provide suitable advice aligned to their clients’ interests, I’d still warn anyone against placing too much reliance on the results of the inaugural exam.

Never generalise from a specific

In reality, the 90% pass rate is only a useful lead indicator if the samples are legitimately representative.

Even though I don’t know who sat the inaugural examination, I wonder whether these advisers are properly representative of the industry.

My suspicion is that they are not, and that the advisers who chose to sit the inaugural exam did so because they are either demonstrably better than their peers or were simply more (legitimately) confident in their capabilities.

If either explanation is true, the 90% pass rate could be dangerously misleading for some advisers.

Don’t relax, prepare.

As we previously advised, you can prepare by:

• Reading your Licensee’s Compliance Manual and policies;
• Inviting your Compliance Manager to lunch (and interrogating them mercilessly);
• organising a regular meeting with advisers to discuss the application of the laws, regulations and codes to consumer dilemmas;
• enrolling in workshops that address the exam or the underlying topics (first make sure the presenters are credible experts);
• Reading the FASEA Practice Exam.

The “financial services laws“, sometimes referred to as the “applicable laws” or the “relevant laws” are a broad range of interrelated laws including the Corporations Act (including, for example The Professional Standards Act ), the Australian Securities and Investments Commission Act, the Anti-Money Laundering and Counter-Terrorism Financing Act, the National Consumer Credit Protection Act, the Privacy Act, the Competition and Consumer Act, the Income Tax Assessment Act, the Cash Transactions Reports Act, the Superannuation (Industry) Supervision Act, and all other existing and new laws, regulations and rules including Australian Stock Exchange Rules) which may impact Licensees, their representatives or their authorised activities.

FASEA September results

On November 8, 2019 FASEA issued a media release publishing the results for the Financial Adviser exams held 19 September and 23 September 2019.

I recommend that you read the FASEA release but, essentially, it simply confirmed that:

• 1697 advisers sat the inaugural examination (up from 579 in June); and
• Over 88 percent of candidates passed (down from 90%).

The results are interesting on a number of levels. Although almost three times as many advisers sat the September exams, the pass rates are generally consistent (90% in June and 88% in September).

The interesting part is what the releases don’t tell us. For example

• How many advisers sitting the September exam had sat for the June exam?
• What percentage of advisers (if any) failed on their second attempt?
• What areas of the exam proved most problematic for advisers?
• Which of the three domain areas recorded the highest/lowest scores?
• Are there any common characteristics (experience, education or focus) shared by, or common to, the 10-12% that failed?