Professional standards for financial advisers
In March 2017, the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 commenced and introduced reforms to the Corporations Act 2001 (Corporations Act) to raise the education, training and ethical standards of financial advisers.
As part of these reforms, since 1 January 2019 professional standards have applied to financial advisers who provide personal advice on relevant financial products to retail clients. See How the reforms affect you for more information.
The timeline for Australian financial services (AFS) licensees and financial advisers to comply with the professional standards is set in the Corporations Act. For what to do by when, see Timeline for the reforms.
On 28 October 2021, the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021 (Better Advice Act) transferred functions relating to the reforms from the Financial Adviser Standards and Ethics Authority (FASEA) to the Minister and to ASIC.
Requirements for financial advisers
The professional standards require financial advisers to:
- have an approved qualification
- pass the financial adviser exam
- participate in 40 hours of continuing professional development (CPD) each year
- comply with the Financial Planners and Advisers Code of Ethics 2019 (Code of Ethics) – a set of principles and core values in the areas of ethical behaviour, client care, quality process and professional commitment.
Anyone wanting to become a financial adviser must also complete a full-time professional year that includes at least 1,500 hours of work activities and 100 hours of structured training (a total of 1,600 hours).
For more information about the professional standards, see:
Minister’s role in the professional standards
Under the Better Advice Act, the Minister is responsible for setting, and ASIC is responsible for implementing and overseeing the professional standards for financial advisers. This includes:
- making education and training standards for financial advisers
- approving the format for the financial adviser exam
- setting CPD requirements
- developing the Code of Ethics.
The Minister is also responsible for approving domestic and foreign qualifications.
Visit Treasury’s Financial Adviser Standards website at fas.treasury.gov.au for more information about:
- adviser education requirements, including:
- approved courses
- the assessment of foreign qualifications
- requirements for existing advisers
- new financial advisers and the professional year requirements
- qualified tax relevant providers
- higher educational providers
- the Code of Ethics
- CPD requirements.
ASIC's role in the professional standards
Since November 2019, AFS licensees have been required to update ASIC's Financial Advisers Register when:
- authorising a financial adviser
- a financial adviser ceases to work under their licence, or
- information about the financial adviser they have authorised changes, including the adviser’s qualifications and address.
This helps consumers to check that a financial adviser is qualified to provide advice.
Government announcement of new single disciplinary body
Recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which the Government accepted, was to establish a new disciplinary system for financial advisers. On 21 October 2021, the Better Advice Act was passed and gave effect to recommendation 2.10. This included:
- expanding the operation of ASIC’s Financial Services and Credit Panel (FSCP)
- winding up FASEA from 1 January 2022.
From 1 January 2022, the standard-setting function of FASEA has been moved to the responsible Minister and Treasury, and ASIC is responsible for administering the financial adviser exam.
The transition and application provisions in the Better Advice Act preserve the legislative instruments made by FASEA except for the exam legislative instrument, by providing that these instruments will continue in force as if they were instruments made by the Minister.
This means that financial advisers will need to continue to meet the education and training standards and the Code of Ethics made by FASEA, until such time as the Minister amends these standards or makes new standards.