The government has also passed legislation to lift the professional, education and ethical standards of financial advisers, including:
- Compulsory education requirements for both new and existing financial advisers;
- Supervision requirements for new advisers;
- A code of ethics for the industry;
- An ongoing professional development component.
The previous education requirements, set out in ASIC guidance, allowed some financial advisers to become qualified to provide financial advice to retail consumers after only four days of training, and the Minister for Revenue and Financial Service noted:
“Understandably, both the Financial System Inquiry and the Parliamentary Joint Committee found that these requirements were not sufficient.”
The reforms established a commonwealth standard setting body to govern the professional standing of the financial advice sector, which will set the educational requirements, develop, and set the exam, and create the uniform Code of Ethics.
The new requirements will commence on 1 January 2019- from this date, new advisers will be required to hold a relevant degree before they are eligible to commence the supervision year and to sit the exam.
Existing advisers will have two years (i.e., until 1 January 2021) to pass the exam, and five years (i.e., until 1 January 2024 to reach a standard equivalent to a degree (this transition period recognises that existing advisers may need to complete the education requirements on a part-time basis while continuing to service their existing clients).
The Code of Ethics will commence on 1 January 2020, with all advisers being required to adhere to the code from that day forward.
One the reforms are bedded down; the government will turn its attention to developing and implementing an industry funding model for the standards body.
Ref: Minister for Revenue and Financial Service’s Media Release, 9 February 2017