A new year also saw the new professional standards requirements commence for financial advisers who provide personal financial product advice to retail clients. Changes to the Corporations Act will gradually replace the current training standards outlined in RG146.
To comply with the new professional training standards, AFS Licensees should:
- 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 (being someone not listed on the FAR), 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) have released the proposed guidance on the Financial Adviser Examination.
FASEA proposes that the examination will test 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 2021 to successfully sit the exam and up until 1 January 2024 to complete an approved qualification.
To summarise, the current RG146 requirements will:
- 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
- Not be applicable to new entrants seeking to become an adviser from 1 January 2019; they will be bound by the new professional standards requirements.
Background and Further reading
- New Professional Standards and Training Obligations for Financial Advisers are Coming Soon;
- Updates to the Professional Standards Reform are Coming – Are you Prepared;
- 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.
Julie works with the Compliance and Legal Team with a focus on compliance and legal services. Julie assists with document preparation for participants in the financial services industry and with conducting legal research. Julie assists the compliance team in implementing ongoing compliance support, updating procedural documentation and assisting clients with the preparation of AFSL and ACL applications. Julie also assists in the preparation of legal documentation and legal research. Prior to joining Sophie Grace, Julie worked as an In-House Legal Counsel for a property development company, where she assisted with agreements and contracts, as well as assisting in banking and financial services. Julie has a Bachelor of Arts (Commercial Law) and a Bachelor of Law from Macquarie University. She is admitted as a solicitor in NSW.