LEGISLATION will be introduced into the Parliament this year to mandate professional standards for financial advisers.
The reforms will 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
- Ongoing professional development component
The new professional standards will begin on January 1, 2019. Existing advisers will have until January 1, 2021 to pass the new exam and until January 1 2024 to reach degree-equivalent status.
The professional standards legislation will also establish an independent standards body, as a Commonwealth company, to govern the professional standing of the financial advice industry.
The independent standards body's Chairman and directors will be appointed by the Minister.
The cost of establishing the body will be met exclusively by the large banks and AMP and the Government will work with stakeholders to ensure the ongoing funding model is developed and implemented as soon as practicable.
The standards' body will be responsible for developing and setting the industry exam, developing the code of ethics, and determining the education and development requirements for both new and existing advisers.
A single, uniform code of ethics will set the ethical principles that advisers will operate under. Professional associations and other independent third party monitoring bodies will develop compliance schemes to monitor and enforce advisers' adherence to the Code.These compliance schemes will be approved by ASIC.
These compliance schemes will be approved by ASIC.
The reforms ensure that financial advisers will be held to a high standard of ethics, with non-compliant advisers subject to disciplinary action and sanction by the monitoring bodies.
"This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector," said Minister for Revenue and Financial Services Kelly O'Dwyer.
