AFA News 8 September 2022. On 24 August 2022, the Government issued a media release and published a consultation paper addressing proposed changes to the financial adviser education standard.
Minister Stephen Jones has framed his media release in the context of the difficulty of Australians accessing financial advice, wanting to attract talent back into the profession, and acknowledging the loss of much needed experience.
This consultation paper comes after an announcement from Minister Stephen Jones in December last year (whilst in opposition), which he has classified as an election commitment. It also follows the consultation paper issued by the former Government at the end of last year.
This consultation paper is addressing three key things:
- The recognition of experience and the introduction of a new experience pathway.
- Providing greater flexibility in the education requirements for new entrants.
- Modifying the Professional Year requirements to reduce the administrative burden.
One thing that this paper makes very clear is that the Government has no intention of changing the requirement for Existing advisers to complete the exam.
This consultation paper is considering changes to the existing education pathways for:
- Existing advisers with 10 years full-time experience;
- New entrants
The proposal addresses the possible introduction of a new pathway, known as the experienced adviser pathway.
Who is an “experienced adviser”?
An adviser with 10 years full-time experience in the 15 years, between 1 January 2004 and 1 January 2019 and who has a clean disciplinary record.
A clean record refers to an adviser having no disciplinary actions recorded against them on the FAR, however, it does note that prior to 2022, the only actions recorded were banning orders and enforceable undertakings. It thus considers the option of a broader source of evidence on misconduct, including complaints and disciplinary action taken by professional associations. We will be taking a very close look at this to ensure the outcome is reasonable and practical.
Advisers would be expected to self-declare that they meet the criteria for the experienced adviser pathway, although this would be subject to random audits by ASIC.
What happens for existing advisers who do not have 10 years’ experience in the set 15 years?
Existing advisers who were registered on the FAR between 1 January 2016 – 1 January 2019, who do not meet the 10 years’ experience threshold between 2004 and 2019 will have no change to their education requirement. This means that there is no additional recognition of prior learning and experience available for these advisers.
The following table sets out the proposed pathways:
|Existing Advisers||Experienced Advisers||New Entrants|
|Who are they||Advisers who were registered on the FAR between 1 Jan 2016 – 1 Jan 2019 who do not meet the experience criteria||Advisers with 10 years full-time experience between 1 Jan 2004 – 1 Jan 2019
Have a clean disciplinary record*
|Individuals who are not existing advisers or experienced advisers.|
|Education requirements||8-unit Graduate Diploma||No tertiary requirement||Bachelor’s degree (or higher) covering 5 core areas and professional year|
As was the case in the previous consultation, we anticipate that the proposal for an experienced adviser pathway, with no education requirement, will generate a lot of debate and likely opposition
New entrants must still complete a bachelor’s degree; however, it is proposed that the requirement to complete an “approved” degree covering 11 core areas, would be reduced to just 5 core areas.
The intention is to allow for more degrees to be accepted, rather than having a prescriptive list of “approved degrees”. The proposal is that education institutions will be able to self-assess their courses.
New entrants will still have to complete a professional year and pass the exam, however, the proposal would allow the new entrant to sit the exam at any time and to integrate elements of the professional year into their tertiary study.
Click here for more information and to view the Financial adviser education standards consultation paper.
Submissions in response to this consultation paper are due by 16 September 2022. We encourage members to either make their own submission to Treasury or provide their feedback directly to the AFA.
The AFA will be making a submission in response to these proposals. If you wish to provide any comment or have any questions then, please email email@example.com.
Issued 08.09.2022. AFA Policy & Education Update