Submission to Financial Adviser and Standards and Ethics Authority (FASEA) – Consultation Paper 6: Continuing Professional Development (CPD)

DRAFT Submission to Financial Adviser and Standards and Ethics Authority (FASEA) – Consultation Paper 6: Continuing Professional Development (CPD)

We refer to FASEA’s Consultation Paper 6: Continuing Professional Development (paper) and provide submissions to FASEA on S3 of the Paper.

About Kit Legal

We are a specialised financial services law firm. We provide compliance and legal support to heavily regulated businesses, including those which operate under the AFSL, ACL and AML regimes.

Tiered-approach to CPD hours

 The paper proposes that ‘relevant providers’ will need to complete at least 50 hours of CPD activities each year. Our concern relates to the proposed blanket approach, which does not recognise that various relevant providers will not need to undertake the same number of CPD hours to remain competent to provide financial advice. Particularly, our concern relates to the disproportionately onerous burden that 50 CPD hours will impose on relevant providers operating under the limited AFSL regime.

The limited AFSL regime was established as a consequence of the repeal of the accountants’ exemption in reg 7.1.29A of the Corporations Regulations(Cth). The intention of the limited AFSL regime is to align the provision of SMSF advice provided by accountants with advice provided by other advice providers. However, while the regime is aligned with the AFSL regime that applies to other advice providers, it is not the same given financial product recommendations (other than SMSFs) cannot be made under the limited regime.

For relevant providers who are not operating under a limited AFSL, we consider that a substantial proportion of CPD undertaken will relate to changes in product terms, definitions and structures, as well as industry insights which we think is required to maintain and advance their knowledge and competence in those areas. However, given the limitations on recommending financial products, this will not be relevant to advisers operating under the limited AFSL regime. Thus, we consider that FASEA should adopt a tiered approach to CPD hours, and specifically, should reduce the number of CPD hours that accountants operating under a limited AFSL need to complete each year.

Without adopting a tiered approach for accountants, we think the CPD hour requirement will impose a disproportionately high burden on limited AFSL holders. We are concerned that this may cause limited AFSL holders to relinquish their licence, which we consider to be problematic given the significant gate-keeping role that accountants play in the provision of SMSF advice.

50-hour requirement generally

We also consider 50 hours of CPD (whether applying to relevant providers who operate under a limited AFSL or otherwise) is excessive having regard to the CPD regimes of other professions. For example:

  • Legal practitioners in SA are required to complete a minimum of 10 hours of CPD activity per CPD year;[1]
  • Financial planners with a CFP designation are required to complete a minimum of 35 CPD hours each CPD year[2]; and
  • Accountants who are members of Chartered Accountants Australia and New Zealand or affiliate members are required to complete a minimum of 20 CPD hours each CPD year[3].

We consider that CPD imposed on relevant providers (other than those under the limited AFSL regime) should be more in line with the number of hours prescribed above.

Our recommendations

Our recommendations in relation to S3.1 of the paper are as follows:

RECOMMENDATION COMMENTS
Recommendation 1

Reduce the number of CPD hours that accountants operating under the limited AFSL regime have to complete.

 

We consider 20 CPD hours per year is sufficient for accountants to maintain and advance their knowledge in the areas that they can provide advice under the limited AFSL regime. Our reasoning for reducing the hours is included above, but also to recognise that accountants will complete additional CPD hours as part of their ongoing CPD requirements with their professional bodies.
Recommendation 2

In the alternative to Recommendation 1, we consider that FASEA should provide specific guidance on CPD undertaken by accountants for the purposes of meeting their obligations under the CPA/CAANZ regimes which can go towards meeting the CPD requirement imposed by FASEA.

We consider that this reduces the compliance burden imposed on accountants while furthering the objectives of FASEA. FASEA should be clear on what CPD undertaken for CAANZ/CPA purposes can be used for FASEA purposes given the majority of CPD undertaken for CAANZ/CPA purposes will not relate to the provision of financial advice.

[1]LPEAC Rules 2004(SA) r 3A; Appendix C.

[2]Financial Planning Association of Australia, FPA Continuing Professional Development Policy (June 2016) <https://fpa.com.au/wp-content/uploads/2016/06/2016_05_18-CPD-Policy-2016_5-FINAL.pdf>.

[3]Chartered Accountants Australia and New Zealand, CPD Requirements (2018) <https://www.charteredaccountantsanz.com/learning-and-events/managing-your-cpd/cpd-requirements/cpd-requirements-for-australian-and-international-members>.  

Please contact catherine@kitlegal.com.au or peter@kitlegal.com.au if you would like to discuss any of this further.

 

Yours sincerely,                               

Catherine Evans                          Peter Hagias

CEO & Senior Lawyer                  Senior Lawyer