How the reforms affect you

As part of the reforms introduced into the Corporations Act 2001 (Corporations Act), professional standards apply to:

• Australian financial services (AFS) licensees and limited AFS licensees
• financial advisers who provide personal advice on one or more relevant financial products to retail clients, and
• anyone who wants to become a financial adviser.

For what to do by when, see Timeline for the reforms.

AFS licensees

AFS licensees and limited AFS licensees have an obligation to ensure the financial advisers they have authorised comply with the professional standards.

For each financial adviser, an AFS licensee must:

• add them to the Financial Advisers Register
• ensure they have a qualification that meets the education standard by the required date
• ensure they have passed the financial adviser exam by the required date
• establish a policy to plan and monitor their professional year (for provisional financial advisers)
• develop a continuing professional development (CPD) policy, and plan and approve 70% of their CPD activities, and
• take reasonable steps to ensure they comply with the Code of Ethics.

AFS licensees must update the Financial Advisers Register with the relevant details of the financial advisers that they authorise. For a list of details that must be included on the Register, see Information on the Financial Advisers Register.

For compliance dates for AFS licensees, see Timeline for the reforms.

Financial advisers who are ‘existing providers’

Who is an ‘existing provider’?

To be recognised as an ‘existing provider’, a person must, among other requirements, have been authorised to provide personal advice to retail clients on ‘relevant financial products’ between 1 January 2016 and 1 January 2019. In general, this will mean that the adviser was listed on the Financial Advisers Register at any time between 1 January 2016 and 1 January 2019.

Note 1: ‘Relevant financial products’ are financial products other than basic banking products, general insurance products, and consumer credit insurance, or a combination of any of those products: see section 910A of the Corporations Act. 

Note 2: An ‘existing provider’ is defined in the Corporations Act as a person who:

• was authorised to provide personal advice to retail clients on relevant financial products at any time between 1 January 2016 and 1 January 2019 (i.e. meets the definition of ‘relevant provider’ in section 910A of the Corporations Act during that timeframe)
• was not banned or disqualified on 1 January 2019, and
• was not the subject of a court enforceable undertaking on 1 January 2019 (see subparagraph (a) of the definition of ‘existing provider’ in section 1546A of the Corporations Act).

What requirements apply to existing providers?

The professional standards require existing providers to:

• meet the degree standard (see Qualification, exam and professional development), and
• pass the financial adviser exam (see also Information Sheet 260 FAQs: Timeframe for passing the financial adviser exam (INFO 260)).

Depending on their current qualification, an existing provider may need to do a graduate diploma, bachelor's degree, master’s degree, or only the Code of Ethics bridging unit.

Existing providers must also continue to:

• do CPD activities every year, and
• comply with the Code of Ethics.

For compliance dates for financial advisers, see Timeline for the reforms and INFO 260. See also the Financial advisers quick reference guide.

Using the title 'financial adviser'

To call themselves a financial adviser or financial planner (and other similar terms), existing providers must:

• comply with the professional standards, and
• be authorised to give personal advice on relevant financial products to retail clients.

‘Foreign existing providers’

A foreign adviser will be recognised as an existing provider if they:

• provided personal advice in a foreign country to retail clients in relation to relevant financial products at any time between 1 January 2016 and 1 January 2019, and
• were not prohibited under the law of the foreign country from providing such advice on 1 January 2019 (see subparagraph (b) of the definition of ‘existing provider’ in section 1546A of the Corporations Act). 

We refer to foreign advisers who are recognised as existing providers as ‘foreign existing providers’.

AFS licensees are required to satisfy themselves that a foreign adviser they intend to authorise as a financial adviser has met the professional standards within the required timeframes before authorising and registering the foreign adviser to provide personal advice. How the professional standards apply to a foreign adviser depends on whether the foreign adviser is considered to be a ‘foreign existing provider’ or a ‘new financial adviser’ (that is, a person training to become a financial adviser).

To verify whether a foreign adviser is a foreign existing provider, AFS licensees should ask the foreign adviser to provide evidence showing that they:

• provided personal advice at any time during the period 1 January 2016 to 1 January 2019 (see the definition of ‘personal advice’ in section 766B(3) of the Corporations Act. For more information on whether advice is personal advice, see Regulatory Guide 175 Licensing: Financial product advisers – Conduct and disclosure (RG 175)): 
  • in a foreign country;
  • to retail clients (see sections 761G and 761GA of the Corporations Act. For more information on whether advice is provided to a retail client, see RG 175); and 
  • in relation to relevant financial products (see Note 1 above); and
• were not prohibited under the law of the foreign country from providing such advice on 1 January 2019.

All of these elements must be satisfied for a foreign adviser to be recognised as a foreign existing provider.

If a foreign adviser is unable to provide evidence to show that they satisfy some or all of these elements of the definition of ‘existing provider’, the regulator of the relevant overseas jurisdiction can be contacted to obtain information about the foreign adviser. Information about the foreign adviser may also be publicly available on a register maintained by the overseas regulator.

If the information provided by the relevant regulator about the foreign adviser is insufficient to evidence that the foreign adviser is a foreign existing provider, the foreign adviser’s employer(s) during the relevant time period can be contacted to obtain the missing information.

The information from the overseas regulator and/or employer should address each element in subparagraph (b) of the definition of ‘existing provider’ in section 1546A of the Corporations Act. If it does not adequately address each element, the foreign adviser will be considered to be a ‘new financial adviser’. For information on how the professional standards apply to new financial advisers, see the Financial advisers quick reference guide.

Person who provides general advice

The professional standards do not apply to a person who only provides:

• general advice
• personal advice on products that are not relevant financial products, such as general insurance, consumer credit insurance or basic banking products, and/or
• personal advice on relevant financial products to wholesale clients.

Relief from the reforms

ASIC can grant exemptions from or modifications to the law in certain situations. You can apply to ASIC for relief from the Corporations Act. See Apply for relief for more information.

ASIC will generally not grant relief that would reverse the usual and intended effect of these reforms. The intent of the professional standards reforms is to raise education, training and ethical standards of the financial advice industry. Given this intent, ASIC is unlikely to grant relief to a person who was not able to meet the ‘existing provider’ definition because they were, for example:

• taking a career break
• taking a break due to health‑related issues, or
• employed in another role or occupation.

RG 146 minimum training standards

Regulatory Guide 146 Licensing: Training of financial product advisers (RG 146) does not apply to new or provisional financial advisers.

RG 146 continues to apply to people who provide:

• general advice
• personal advice on basic banking products, general insurance, and/or consumer credit insurance
• individuals who provide financial product advice on a time-sharing scheme.

We are reviewing the guidance in RG 146 on the training for these people.