The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, today introduced legislation into Parliament to mandate professional standards for financial advisers.
The Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 includes:
- 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.
Currently, ASIC guidance sets out the minimum knowledge, skills and education standards for financial advisers. Both the Financial System Inquiry and the Parliamentary Joint Committee raised concerns with the current standards, and questioned whether they were appropriate to ensure that advisers were professionally competent.
“The current requirements have allowed some financial advisers to become qualified to provide financial advice to retail consumers after only four days of training. There is also no specific requirement currently for advisers to undertake continuous professional development. The Government’s reforms will significantly increase the education, training and ethical standards of financial advisers, who will need to be qualified to a standard equivalent to a degree,” Minister O’Dwyer said.
But general insurance brokers can rest easy – for now – as we have been carved out of these proposed new laws.
“This is the result of over two years’ lobbying by NIBA, and our consistent arguing that there is no evidence of systemic poor advice on general insurance products and services,” says Dallas Booth, NIBA CEO.
But he emphasises: “Brokers have a clear education path to achieve and maintain to claim to be a Qualified Professional Insurance Broker.”
The new professional standards regime will commence on 1 January 2019. From this date, new advisers entering the industry will be required to hold a relevant degree. Existing financial advisers will have access to transitional arrangements, allowing them two years, until 1 January 2021, to pass the exam, and five years, until 1 January 2024, to meet the education requirements. 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.