Adviser Professional Standards Reforms

Thursday 01 August 2019

This is an updated version of an article first published in February 2019.

The Financial Adviser Standards and Ethics Authority (FASEA) continues to release details and guidance to support the Adviser Professional Standards, giving the industry a clearer view on the practical operation of the reforms.

In this article we cover the following key elements of the reforms, providing an overview of the requirements and what the changes mean for advisers.

The focus here is on the impacts to Existing Advisers (those who were authorised to provide personal advice to retail clients at any time between 1 January 2016 and 1 January 2019). These Advisers benefit from transitional arrangements which are outlined below. The requirements for New Entrants (those who don’t qualify for transitional arrangements) are covered in a separate article.

We intend to update this article regularly to take into account new developments, with the aim of it being used as a valuable reference tool.

Overview

The new professional standards for financial advisers commenced on 1 January 2019. The reforms are intended to raise the education, training and ethical standards of financial advisers by requiring those who provide personal advice to retail clients to hold a degree, pass an exam, meet CPD requirements and comply with a Code of Ethics. New advisers who enter the profession from 1 January 2019 (or those who otherwise don't meet the transitional rule requirements) will also need to undertake a Professional Year.

FASEA is responsible for setting the details of the new standards.

Who is required to meet the new standards?

Financial advisers need to meet the standards if they give personal advice to retail clients on financial products, other than basic banking products, general insurance products, consumer credit insurance, or a combination of any of these products. This includes accountants who give personal advice under a limited Australian Financial Services Licence (AFSL).

For simplicity, we use the term ‘Adviser’ to refer to those who are subject to the standards.

Transitional arrangements

Transitional arrangements apply to Existing Advisers, that is, those who were authorised to provide personal advice to retail clients at any time between 1 January 2016 and 1 January 2019 (and who were not subject to a banning order or enforceable undertaking not to provide financial product advice or financial services generally on 1 January 2019).

The transitional arrangements give Existing Advisers until 1 January 2024 to meet the education standards and 1 January 2021 to pass the Exam. Existing Advisers are not required to undertake a Professional Year.

Advisers can demonstrate they are an Existing Adviser by having had a status of 'current' on ASIC’s Financial Advisers Register at any time between 1 January 2016 and 1 January 2019. Without this recognition, ASIC has stated that it will treat an Adviser as a New Entrant to the industry1.

Milestones

The timeline below shows the milestones for the key requirements of the reforms.

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1 See ASIC Media Release 18-355MR Financial advisers urged to ensure registration by 31 December 2018, dated 23 November 2018.

2 See Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018, made on 19 December 2018 and FPS004 Continuing Professional Development Policy, January 2019.

3 See FPS004 Continuing Professional Development Policy, January 2019.

4 See FASEA’s CPD Frequency Asked Questions.

5 See FPS001 Education Pathways Policy, April 2019.

6 Approved Degrees are listed in FASEA Approved Degrees and Equivalent Qualifications and Courses to meet the Education Standard.

7 See FASEA Approved Recognition of Prior Learning List, July 2019.

8 See FASEA Approved Recognition of Prior Learning List, July 2019.

9 See FPS005 Foreign Qualifications Policy, April 2019.

10 See FPS006 Examination policy, February 2019. See FPS006 Examination Policy, February 2019.

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