Credit:<\/span>Alex Ellinghausen<\/cite><\/p>\nThose who fail to pass the exam by the end of the year will have to leave the industry. Senior executives at top broking firms including Morgans and Ord Minnett have said ambiguous questions and poor feedback was causing high failure rates.<\/p>\n
The exam questions deal with insurance, superannuation, welfare and tax. Morgans executive chair Brian Sheahan is now calling for a test that is \u201cfit for purpose\u201d with questions tailored to stockbrokers.<\/p>\n
\u201cIt\u2019s proven to be set by people focused very academically on areas that are not related to stockbroking,\u201d Mr Sheahan said.<\/p>\n
However, Senator Hume said there had been an average pass rate of 84 per cent across the board, and some firms would struggle more than others.<\/p>\n
\u201cThere is plenty of opportunity to practise it. There\u2019s plenty of opportunity to do training around it. And the best firms are doing that,\u201d she said. \u201cI can\u2019t understand firms that have put their head in the sand. It\u2019s a denial of the reality of the industry they work in.\u201d<\/p>\n
She said the test was not intended to broaden the industry\u2019s skill set, rather examine the general competency of the workforce. \u201cThe focus is competence and knowledge, it\u2019s not trying to expand their repertoire.\u201d<\/p>\n
Senator Hume said she had engaged with senior stakeholders within the stockbroking community to address concerns about the test. However, she did not have the power to compel the soon-to-be-defunct body responsible for the test, the Financial Adviser Standards and Ethics Authority, to make changes to the exam because it was an independent body.<\/p>\n
Independent consultant Joel Ronchi has been running training programs for stockbrokers over the past few months after hearing that fail rates of between 50 and 60 per cent were commonplace among top firms.<\/p>\n
\u201cThe exam is very broad where brokers\u2019 focus is very narrow traditionally. They\u2019re being asked to consider a whole range of things they don\u2019t usually focus on,\u201d he said.<\/p>\n
One senior stockbroker at a top firm with over 40 years\u2019 experience, who spoke on the condition of anonymity because he was not authorised to speak to the media, was among the cohort who failed the November exam.<\/p>\n
\u201cThis is a really serious thing. It\u2019s going to shake up the industry, there\u2019s going to be a lot of clients who are not going to get serviced next year,\u201d he said. \u201cI know three firms that went through, one had a 100 per cent fail rate. These are not small, two-band operations. They\u2019re multi-tiered stockbroking firms.\u201d<\/p>\n
Senator Hume said it did not seem plausible that hoards of stockbrokers would leave the industry because of the exam, but conceded some may leave on their own terms.<\/p>\n
\u201cNaturally some will choose to retire, there will always be some churn in the industry and new ones will come in. That\u2019s to be expected.<\/p>\n
\u201cThose firms that have stepped up have been very successful and have taken it very seriously. They do that because they know there is competitive advantage in doing so.<\/p>\n
\u201cThey will be able to have the equivalent of the heart tick on their brokers that says these are highly professional, highly educated, highly capable individuals that are looking after your best interests.\u201d<\/p>\n
Another stockbroker at a top tier firm, with 25 years\u2019 experience, said he emailed Senator Hume to voice his concerns but had received little response.<\/p>\n
The email, obtained by this masthead, said the FASEA exam would \u201chollow out an industry\u201d and \u201cfail to protect\u201d retail investors.<\/p>\n
Senator Hume ruled out providing any further extensions to sit the test after the deadline had already been pushed back once to accommodate for COVID-19.<\/p>\n
\u201cYou can do it online, in person. It\u2019s a very flexible approach to doing it,\u201d she said. \u201cWe shouldn\u2019t need to extend it further.\u201d<\/p>\n
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