From 1 January 2019 the new professional standards requirements came into effect for financial advisers who provide personal financial product advice to retail clients. Changes to the Corporations Act replaced the training standards outlined in RG146.
To comply with the new professional training standards, AFS Licensees were required to:
- Review existing advisers’ qualifications to ensure they meet the educational requirements;
- Review existing internal policies to ensure that there will be ongoing professional training and supervision available for advisers affected by the changes; and
- Ensure existing advisers are on track to upgrade their existing qualifications if required.
What do I need to know?
Existing advisers are those who were listed on the Financial Advisers Register (FAR) at any time between 1 January 2016 and 1 January 2019 and who are not banned, disqualified or subject to an enforceable undertaking on 1 January 2019. AFS Licensees have an ongoing obligation to ensure all information relating to their financial advisers is up to date.
Where an AFS Licensee wishes to appoint a financial adviser who is not an existing adviser, the financial adviser must:
- complete an approved authorisation,
- undertake a professional year of work and training, and
- sit the Financial Adviser Examination.
The Financial Adviser Standards and Ethics Authority (FASEA) released guidance on the Financial Adviser Examination.
The examination tests the practical application of adviser knowledge in:
- Corporations Act (more specifically, Chapter 7 – Financial Services and Markets);
- FASEA Code of Ethics;
- Behavioural finance – client and consumer behaviour, engagement and decision making;
- Financial adviser construction – suitability of advice aligned to different consumer groups; and
- Applied ethical and professional reasoning and communication.
Existing advisers have until 1 January 2022 to successfully sit the exam and up until 1 January 2026 to complete an approved qualification.
To summarise, RG146 requirements:
- Remain applicable to all existing advisers;
- Remain applicable to advisers who provide advice relating to Tier 2 or less complex financial products, or who only provide advice relating to a time-sharing scheme; and
- Are not applicable to new entrants seeking to become an adviser as they are bound by the new professional standards requirements.
Background and Further reading
- Updating your ASIC Financial Advisers Register Listing;
- Regulatory Guide 146: Licencing: Training of Financial Product Advisers.
Sophie Grace have dedicated compliance consultants and lawyers who can assist you with these changes to ensure that you are compliant. If you are concerned about the impact of these changes and what they mean to you, please contact us.