Dr Deen Sanders OAM, Partner - Governance, Regulation and Conduct at Deloitte, and previously inaugural CEO of FASEA, walks you through the impacts of the new education standards changes and how you can adapt and build a financial advice business that succeeds in the new environment.

3. Transformation of Financial Advice
– The Royal Commission + changes in legislation + professional standards for
advisers means everything will be different
Dr Deen Sanders OAM 2018

4. Advice Standards Reform – Transformation platform© 2018 Deloitte Touche Tohmatsu. 5
©2018 Deloitte Touche Tohmatsu. All rights reserved.
What is FASEA?
Financial Adviser Standards and
Ethics Authority
FASEA was introduced as a result of the passing of the
Corporations Amendment (Professional Standards of
Financial Advisers) Act 2017.
It introduced several measures to raise the education,
training and ethical standards of financial advisers
providing personal advice to retail clients on more
complex financial products with the legislative goal to
restore trust and confidence in the financial advice
sector.

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Adviser consequences
What is the
consequence for
Advisers
Jan 2019
New entrant education
requirements in place
PY requirement (advice
prohibitions) commence
for all new Advisers
CPD requirement
commences
Restriction on use of
terms begins
Exam doors
open Jan 2020
Code of Ethics
compliance begins
Jan 2021
Exam must be
passed or forced
Adviser exit
Jan 2024
Qualifications to
be completed
Transition
concludes
Undertake exam
Qualification
Degree – new
Post graduate –
existing
Code of Ethics
(Monitoring Body)
Continuing
Professional
Development
Professional
year
CPD reporting to
all parties
Mar-Jun(?) 2019
~ 18 months (?)

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https://www.professionalplanner.com.au/2018/09/advisers-see-regulation-fasea-standards-hindering-growth/
Advisers see regulation, FASEA standards as the most significant risks to their
business and barriers to future growth

7. Advice Standards Reform – Transformation platform© 2018 Deloitte Touche Tohmatsu. 8CONFIDENTIAL
Education
pathways

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What does it
really mean

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FASEA Code of
Ethics

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Code Monitoring Bodies and
Regulation of Standards
Protecting and leveraging your own compliance systems

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The real
threshold
point

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CPD

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What you can change
and what you cant
Reluctance from some
to disagree with
FASEA because it
implies disagreement
with raising
professional and
education standards.
Its entirely
appropriate to agree
with the goal but
disagree with the
process and the
outcome
14 December
7 days left to
have your say
19 December
10 days left to
have your say
Closed
Closed
Closed
?!

14. Looking through the
wrong end of the
telescope

15. © 2014 Deloitte Touche Tohmatsu16
FASEA Standards are not an education exercise
focused only on changing financial advisers
Standards Reform is
about changing the
power and dynamics
between consumers,
their professional
advisers and the
financial services
industry

16. © 2013 Deloitte Touche Tohmatsu
The temperatureonly needs
toraise bymore than 3
degrees for the planet to
change irrevocably – into one
outside the range previously
experienced byhumanity–
James HansenHayne Royal Commission - North Star for conduct and compliance needs to
be ‘should we?’ rather than ‘can we?’
Productivity Commission – indicators of the use of market power to the detriment of consumers (August 2018)
ASIC –the choice between interest and duty to the client is resolved, more often than not, in favour of self interest.
APRA – Prudential inquiry into the Commonwealth Bank of Australia
Institutional Financial Services – running financial advice is no longer viable as a core business, in consideration of
the costs and the risks
Clear writing on the wall that regulators,community,
governmentand even markets are demandinga change in
the way business in Australia is purposed and how
obligationsto clients should (but don’t)sit at the centre of
good business practice
Temperature is rising

17. Everything will change in
Financial Services
Not just because of the Royal
Commission but because change is
what
the community wants,
the market demands and
the industry needs.

18. © 2013 Deloitte Touche Tohmatsu
What will trustworthiness in business demand in the future FSI landscape?
We have distilled 8 key themes from the Interim Report that we think will be critical in shaping the future:
Executive Summary
Theme Deloitte Point of View So what’s next
1.
Community
standards &
expectations
have been brought into sharp focus.
Firms will need to take a lead role in ‘driving’ this new benchmark by
committing to truthfulness, and reorienting to deliver on promises
made.
2. Ethical conduct
ethical leadership will need to be negotiated and
staked out by every organisation.
Firms will need to return to first principles asking what does good
behaviour look like at every level of action and how systems,
policies, and structures can be built to support that.
3. Conflicts of Interest
Will be re-defined and more clearly framed
according to duties owed and accountabilities met.
Firms will need to clearly map conflicts of interest against duties and
identify conflicts that cannot or should not be managed by traditional
means and may need to be avoided altogether.
4.
Remuneration &
Incentives
The biasing power of remuneration and incentive
models is now an established truth. Futuremodels
will need to be informedby what motivates people.
Firms will need to reset models according to real motivations and
target systems, policies and structuresto support that.

19. © 2013 Deloitte Touche Tohmatsu
What will trustworthiness in business demand in the future FSI landscape?
We have distilled 8 key themes from the Interim Report that we think will be critical in shaping the future:
Executive Summary
Theme Deloitte Point of View So what’s next
5. Professionalism
Individual accountabilityunderpinned by formal
systems of standards and measurable conduct will be
the new norm for the industry.
Firms will need to take the lead by building a framework that
references professional expectations for education, ethics, and
accountability.
6.
Client Care &
Outcomes
Truthfulservices and outcomes will be the new
benchmark as outcomes will drive process. A shift in
mindset from buyer beware to seller beware will be
needed.
Firms will need to have a clear understanding of client
expectations and stay agile in order to continually deliver
services that meet them and/or respond appropriately when
they do not.
7.
Governance &
Oversight
Stewardship will be defined by governance models
calibrated to enable Boards to ‘choose to know’ and
‘’choose to act’ to predict and prevent misconduct.
Firms will need to re-calibrate governance models to be
predictive and preventive and this will require better informed
decision making supported by improved information flows (of
good and bad news).
8.
Regulation &
Regulators
Regulation has not met communityexpectations of
fairness and consumer protection and new regulatory
models, increased powers, and proactive compliance
is likely to dominate.
Firms will need to prepare people, systems, and processes for
increased transparency and internal oversight to ensure they
are able to compete in this new regulatory landscape.

20. © 2014 Deloitte Touche Tohmatsu21
Change in the way
consumers interact
with financial services
Source
The thick edge of the wedge The
future for financial advice and the client
service dynamic
3 channels
for financial
advice in
the future

21. © 2014 Deloitte Touche Tohmatsu22
Change in the value propositionand business
model for financial services
Financial Advice is just the
thin edge of the wedge for
whole of industry change
Professionalisation and transformation (restoring
trust and confidence) with wide ranging effect on the
entire business model of financial services is the
natural consequence.
It is the biggest shift to individual accountability since
the introduction of Corporations Act.
It’s intent is larger than FOFA.

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(collectively the “Deloitte Network”) is, by means of this publication, rendering professional advice or services.
Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.
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