STRICT and compulsory education requirements for financial advisers will come in on January 1, 2019 including the requirement for advisers to hold a relevant degree or equivalent.
A number of reforms have been developed by the Federal Government to lift the professional, ethical and educational standards of financial advisers and include:
- compulsory education requirements for both new and existing financial advisers;
- supervision requirements for new advisers;
- a code of ethics for the industry;
- an exam that will represent a common benchmark across the industry; and
- an ongoing professional development component.
The previous education requirements, set out in Australian Securities and Investments Commission guidance, allowed some financial advisers to become qualified to provide financial advice to retail consumers after only four days of training.
The reforms establish a commonwealth standard setting body to govern the professional standing of the financial advice sector. The body will set the educational requirements, develop and set the exam and create the uniform code of ethics.
From January 1, 2019 new advisers will be required to hold a relevant degree before they are eligible to begin the supervision year and to sit the exam. Existing advisers will have two years, until January 1, 2021, to pass the exam and five years, until January 1, 2024, to reach a standard equivalent to a degree.
The transition period recognises that existing advisers may need to complete the education requirements on a part-time basis while continuing to service their existing clients.
The Code of Ethics will commence on 1 January 2020, with all advisers being required to adhere to the code from that day forward.
"These reforms demonstrate the Government's commitment to building trust and confidence in the financial advice industry by ensuring that consumers have access to financial advisers who are professional and competent, and who will put their interests first," Kelly O'Dwyer Minister for Revenue and Financial Services said.
