The Turnbull Government has today announced proposed changes to ensure existing financial advisers are provided with a smooth transition as part of reforms to raise the education, training and ethical standards of the financial advice industry.
The Government is also proposing to establish a standard setting body, initially as a Commonwealth company, to administer the professional standards regime. The body will be responsible for developing and setting the industry exam, developing the code of ethics, and determining the education requirements for both new and existing advisers.
The revised draft legislation and accompanying Explanatory Memorandum has been released for further targeted consultation.
"The Government is clarifying that the reforms, which were announced for consultation late last year, are not intended to require existing advisers to complete a bachelor’s degree," Minister O’Dwyer said.
"Existing advisers will be required to reach degree‑equivalent status, which can be achieved via a number of flexible pathways, including by completing bridging courses approved by the new standards body.
"We recognise that existing advisers will need to balance any further education requirements with the demands of continuing to provide high-quality financial advice to their clients. Existing advisers therefore need sufficient time to meet the new standards.
"The Government is proposing to extend the amount of time that existing advisers will have to reach degree-equivalent status and to pass the new exam requirement for all advisers.
"The education and exam requirements are proposed to commence on 1 January 2019 (revised from 1 July 2017). Existing advisers will have until 1 January 2024 (5 years) to reach degree‑equivalent status and until 1 January 2021 (2 years) to pass the exam.
"The Government will seek views on whether the standards body should have the power to exempt, on a case-by-case basis, existing advisers from the requirement to pass the exam. This exemption is intended to be reserved for highly experienced advisers with exceptional skills and qualifications.
"These reforms will raise minimum standards in the financial advice industry and improve public confidence in the sector, whilst acknowledging the skills and expertise of existing advisers," Minister O’Dwyer said.