AFA News 11 August 2022. The final chance for all existing advisers to sit and pass the Financial Adviser exam was held around the country between 28 July and 1 August 2022. We wish all advisers who sat this exam the best of luck and hope that they get through on this last attempt. We understand that more than 700 existing advisers were yet to pass the exam and that this third sitting in 2022 was the largest so far this year.
Naturally, there will be a large number of advisers who are anxiously awaiting the results that are expected in early September. This is an unenviable position and our hearts go out to these members and their families. At the AFA, we have argued in support of these advisers and also put on two specialist webinars to help advisers with mindset and exam technique guidance. We have long acknowledged that in many cases it was issues with respect to mindset and exam technique, more than knowledge, that was the problem.
We have now reached the point where there is nothing more that these advisers can do, and the time has come to consider the options. The best option is one that involves getting a positive exam result, however as we all know, there is no guarantee of this, and it is important to consider what to do if this is not the case.
A further extension is highly unlikely
The first alternative to consider is the prospect of a further extension. We consider this to be highly unlikely, given that the new ALP Government has never suggested that this was something that they were considering, and the law seemingly would require legislative change (something that is virtually impossible in the short time left), rather than the easier path of a change to an existing regulation. A media release by Minister Stephen Jones on Wednesday 10 August 2022 confirmed the 30 September 2022 deadline.
Taking the career break option
For those advisers who had not passed the exam by 31 December 2021 and had not qualified for the extension (having attempted it less than twice), they still had the option to come off the Financial Adviser Register before 31 December 2021, to preserve their classification as an existing adviser and have the chance to come back again once they had passed the exam.
This option continues to apply to those advisers who had qualified for the extension, if they have not passed by 30 September 2022. It was built into the law as part of the Better Advice Bill in late 2021 (through the particularly complex Section 1684D of the Corporations Act) and is referred to in the final scenario under Question 4 in ASIC’s Information Sheet 260.
This is an option that comes with plenty of complications. You must be off the FAR by 30 September 2022, and you can no longer practice until you pass the exam. Whilst there is one further exam in 2022, there is no published schedule of exams for 2023 and there is little reason to believe that the exam will be any easier in the future. This career break approach might be a good option for an adviser in a larger practice, where someone else can service the clients, however, for a single adviser practice, it is just not a realistic solution. We encourage anyone considering this to think carefully about the practicalities.
Leaving the advice profession
For others, they may have decided that if they don’t pass the exam, then they will just leave the advice profession and either retire or do something else. This is up to each individual, however, if you stay on the register as of 1 October 2022, then you will not have the chance to come back at a later time (through passing the exam) unless you want to take the long path and do a degree and the Professional Year. If there is any doubt in your mind, then maybe consider ceasing on the Financial Adviser Register before 30 September 2022 to allow access to the career break option.
It is not necessary to say that it is critically important to have a succession plan or contingency plan in place in the event of not passing this final exam. Selling a business is a complex time-consuming exercise, so we trust that anyone reliant on this pathway is already well progressed.
We appreciate how difficult this situation will be for many and we can only wish you all the best with the exam results and should it prove to be necessary, the pathway you take in the event of not passing. As a final point on this delicate issue, we call on all advisers to provide whatever help they can to their colleagues who are stuck in this very difficult situation.
For any questions on what happens when the exam deadline finally arrives, please email us at firstname.lastname@example.org.
Issued 11.08.2022. AFA Policy & Education Update