The Adviser Professional Standards 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 12-month supervision and training program, known as the Professional Year.
The Financial Adviser Standards and Ethics Authority (FASEA) is responsible for setting and maintaining the new standards. Legislative instruments for all standards were registered in 2018 and 2019.
This is an updated version of an article first published in February 2019. 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.
Recent developments | |
25 June 2020 |
FASEA announces 3 month CPD relief for advisers in recognition of COVID-19 |
18 June 2020 |
FASEA confirms exam arrangements for remainder of 2020 and participating rates |
17 June 2020 |
Bill giving effect to exam and education deadline extensions passes Parliament |
25 May 2020 |
|
7 April 2020 |
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 – education and exam requirements
Transitional arrangements apply to Existing Advisers, that is, those who were authorised to provide personal advice to retail clients at any time from 1 January 2016 to 31 December 2018 (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 2026 (previously 1 January 2024) to meet the education standards and 1 January 2022 (previously 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 from 1 January 2016 to 31 December 2018. Without this recognition, ASIC has stated that it will treat an Adviser as a New Entrant to the industry.1
Milestones
The timeline below shows the key milestones for the reforms.