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Getting through the door
I’m sure you know that new advisers who enter the profession from 1 January 2019 (or those who otherwise don’t meet the transitional rule requirements) will need to meet the new requirements of the Adviser Professional Standards laws, before being authorised to give personal financial product advice to retail clients.
Unfortunately, there’s a lot of confusion, anxiety, and uncertainty created around this seemingly clear requirement. Part of that may be caused by readily available misinformation, but, in my view, it’s largely the inevitable result of distributing relevant information amongst a variety of pages and documents including:
- Home | Financial Adviser Standards (treasury.gov.au)
- Better Advice Act
- Corporations (Relevant Providers—Education and Training Standards) Determination 2021
- Treasury Laws Amendment (2019 Measures No. 3) Act 2020
- ASIC Corporations (Professional Standards—Transitional) Instrument 2018/894
- Corporations (Work and Training Professional Year Standard) Determination 2018
We see our main role as providing clarity and simplifying compliance and regulatory requirements.
In that spirit, I’d like to suggest that new entrants to the financial advice industry now need to do the following things before you can provide a financial service:
What You Need To Do Before You Can Provide A Financial Service
1. Pass the Financial Adviser exam
From 1 January 2022, ASIC began administering the financial adviser exam (administered by the Australian Council for Educational Research (ACER)).
A new financial adviser (i.e. a person undergoing compliance training to become a financial adviser) must:
- Complete an approved degree before booking the exam.
- Pass the exam before starting the third quarter of their professional year.
2. Meet the Education Standards
New entrants are required to complete an approved qualification at a bachelor degree (AQF7 level), graduate diploma (AQF8 level), masters level (AQF 9) or an equivalent qualification before they can become a provisional financial adviser.
We recommend that you confirm the course is approved by checking the current legislative instrument.
If the degree or qualification was approved by FASEA prior to 31 December 2021 and is listed in the Corporations (Relevant Providers Degrees, Qualifications and Courses Standard) Determination 2021, Higher Education Providers can continue to refer to a course as a “FASEA approved degree” or “FASEA approved qualification”.
3. Complete a Professional Year
A person training to become a financial adviser must do a professional year before they are fully qualified (professional year standard). This is also known as the year of work and compliance training.
A professional year is one-year full time – equivalent to 1,600 hours. At least 100 of these hours must be structured training and forms part of their professional year plan.
A person can start this professional year while they are in the final stages of completing their approved degree.
Structured compliance training should be made up of education that is measurable, assessed, and leads to further qualification (formal and informal) outcomes for participants. This may include a formal study that is undertaken during the professional year, for instance, if completing the Ethics for Professional Advisers bridging course.
The professional year requirements are split into quarters so that a person can transition from a directly supervised approach to an indirectly supervised approach:
- Quarter 1 – Client Observations and support to Supervisor/Experienced Adviser
- Quarter 2 – Supervised Client Engagement and Advice Preparation
- Quarter 3 and 4 – Indirect Supervision of Client Engagement and Advice Preparation
At the end of each quarter, the supervisor must provide a certificate confirming the person:
(a) Has achieved the outcomes set out in the professional year plan for the quarter; and
(b) Is capable of satisfactorily completing the work activities and structured training for the next quarter.
Before commencing the third quarter of their professional year they must:
- Have completed an approved degree or equivalent qualification,
- Have passed the financial adviser exam, and
- Be authorised by their AFS Licensee as a ‘provisional relevant provider‘ on the Financial Advisers Register.
4. Comply with the Code of Ethics
During a New Entrant’s Professional Year, after they have completed an Approved degree and passed the Exam, they may be referred to as a Provisional Financial Adviser or a Provisional Financial Planner and registered on ASIC’s Financial Adviser Register (FAR) on this basis.
From that time, the Code of Ethics will apply.
5. Satisfy CPD requirements (not in their PY)
Following successful completion of the Professional Year, the New Entrant can be authorised to give personal advice in their own right and registered as a Financial Adviser on the FAR.
From that time, the CPD requirements will apply.
6. Expected Outcomes
By the end of the Professional Year, the individual will need to:
Final Completion Certificate: A person is taken to have met the requirements of this determination if the supervisor and the responsible licensee give the person a final completion certificate in accordance with this determination.
Quick Questions (and quicker answers)
Q – Who is a provisional relevant provider?
A – A person who is in training to be a financial adviser and has also completed the below additional requirements:
- an approved degree or equivalent qualification,
- quarter one and quarter two of the professional year,
- passed the financial adviser exam, and
- are authorised by their Australian Financial Services Licensee as a ‘provisional relevant provider’ on the Financial Advisers Register.
The expressions “provisional financial planner” and “provisional financial adviser” are specified to refer to a provisional relevant provider.
Q – When does an AFSL need to register a Provisional Financial Adviser with ASIC?
A – Once they have completed an approved degree and passed the exam and before commencing their third quarter.
You can update the Financial Advisers Register using ASIC Connect.
Q – How do I appoint a provisional adviser on ASIC Connect?
A – Please refer to the ASIC Guide for step by step instructions
Q – How do I book the Financial Adviser Exam from January 2022?
To obtain details about the 2022 Financial Adviser Exam Schedule, book to sit an exam, refer to ASIC’s Financial Advisers Hub.
Q – Where can I find out which degrees are approved?
A – Email email@example.com or refer to current legislative instrument.
Q – If I am an existing Adviser and have completed a degree that is on the FASEA approved list. Do I need to do further study?
Existing advisers who have completed an approved degree will need to complete the Ethics for Professional Advisers bridging course to be compliant with the new standards, unless otherwise specified in the Degrees, Qualifications and Courses Legislative Instrument.
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