The Association of Financial Advisers (AFA) says at least one director of the proposed financial advice standards board should be a practising adviser.

In a submission to Treasury on professional standards, it says this is essential considering the board’s likely impact on the profession.

“At least one director should have experience managing or advising in a small financial advice practice,” the submission says. “The remaining industry directors should have either financial advice experience or have been involved in a financial advice practice.”

The AFA says because a significant proportion of advisers are not aligned with institutions, the adviser director should be aligned with a small practice.

“The impact of legislative changes is likely to be felt greatest within the ranks of small business advisory practices.

“The coalface experience and practical implications upon providing advice and client service will be integral to effective decision-making of the standards-setting body.”

The AFA supports the appointment of an academic to the board, calling for someone with a broad-based background in vocational training.

“This director should have relevant experience with education for financial advisers.”

It wants the board to be flexible on standards, to match advisers’ different areas of specialisation, experience and backgrounds when making rulings.

The AFA has also called for clarification on the role experienced advisers can play teaching new members of the profession.

Mandatory membership of an industry association such as the AFA or Financial Planning Association would help raise professional standards, the submission says.

“As the role of professional associations includes upholding the highest standards of behaviour of its members, they are best positioned to improve, maintain, monitor and enforce standards.

“Given the costs involved to establish, monitor and enforce compliance with the future framework, it will be more cost-effective to build scale through professional association membership than to develop other monitoring and enforcement bodies.”

The AFA says the cost of creating a new monitoring body would be borne by the advice industry, including association members.

Following the unclear federal election result, the AFA’s hope for quick legislation to introduce the standards board seems optimistic.

“To deliver clarity on the requirements and education pathways for advisers, it is imperative the standards board be established sooner rather than later,” association Policy and Professionalism GM Samantha Clarke said. “We believe urgency as well as a commonsense approach to professional standards is paramount.”