The Development of the Professional Standards Framework

The Development of the Professional Standards Framework

For some time there has been a high level of concern that the education standards for financial advisers (RG 146) was too low. In 2014, this became a key issue of discussion for the Australian Parliament, where raising the education standard was addressed by the Senate Inquiry into ASIC, the Financial System Inquiry and a Parliamentary Joint Committee report on lifting professional, ethical and education standards. 

In late 2015, Treasury released for public consultation draft exposure legislation and explanatory materials outlining the proposed framework that would support a future professional standards and education system for financial advisers to comply with.  At the core of this was the proposal to create a Standards Body that would oversee several functions, such as the development of:

  • education standards for future advisers
  • transition pathways and recognition of prior courses/experience for existing advisers
  • the requirements to complete a year of supervision for new advisers entering the industry
  • a Code of Ethics
  • future CPD requirements
  • the content or components of a future registration exam

The framework also proposed to create compliance monitoring schemes - overseen by ASIC - to monitor, investigate and enforce breaches of the future Code of Ethics.  These Code schemes, the regulator, the Standards Body, licensees, new and existing advisers, education providers and professional associations will form the Framework.

Like most reforms, it wasn't perfect in first draft and in fact there were some significant issues with what Treasury had proposed.  AFA members and business leaders gave valuable feedback on the first draft which we reflected in our submission to Treasury.  The AFA also controbuted to an industry consensus submission, including the Choice, the ABA, FPA and SMSFA. 

The AFA was pleased to see that Treasury adopted the majority of your proposed changes when the second version of the Framework was released in May 2016 for further industry consultation.  Here's a summary of the positions secured to date.  After further consultations with AFA Members and business leaders, we proposed to Treasury some further refinements.

This matter is under review by Treasury and we await the formation of a new Government to take these reforms to the implmentation stage during the remainder of 2016.

The history of our key submissions in this debate and development of the Framework is set out below:

June 2016 - AFA submission to Treasury on the revised draft Professional Standards Framework

January 2016 - AFA submission to Treasury on the first draft Professional Standards Framework

7 May 2015 - AFA submission - Lifting the Professional, Ethical and Education Standards in the Financial Services Industry

5 September 2014 - AFA submission - PJC Inquiry into Lifting the Professional, Ethcial and Education Standards in the Financial Services Industry

4 October 2013 - AFA submission - Consultation Paper 215 - Assessment and Approval of Training Courses for Financial product Advisers: Update to RG 146

2 October 2013 - AFA submission - Consultation paper 212 - Licensing: Training of Financial Product Advisers - Update to RG 146