How the reforms affect you
As part of the reforms introduced into the 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 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 per cent 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.
To be recognised as an existing financial adviser (‘existing provider’), a person must, among other requirements, have been authorised to provide personal advice 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: see section 910A of the Corporations Act.
Note 2: An ‘existing provider’ is defined in the Corporations Act 2001 (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 section 1546A of the Corporations Act).
The professional standards require existing providers to:
- bring their qualification up to an approved degree or equivalent level, which includes completing a course on the FASEA Code of Ethics.
- pass the financial adviser exam (see also FAQs: Timeframe for passing the financial adviser exam), and
Depending on their current qualifications, an existing provider may need to do a graduate diploma, bachelor degree, master’s degree, or only the FASEA Code of Ethics bridging course.
Existing providers must also continue to:
For compliance dates for existing financial advisers, see Timeline for the reforms and FAQs: Timeframe for passing the financial adviser exam.
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
- be authorised to give personal advice on relevant financial products to retail clients.
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;
during the period specified in the definition.
RG 146 minimum training standards
The minimum training standards for financial advisers set out in Regulatory Guide 146 Licensing: Training of financial product advisers (RG 146) will generally continue to apply to existing financial advisers until the professional standards apply.
ASIC has taken a no action position when AFS licensees breach licence conditions related to these training standards.
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 and individuals who provide financial product advice in relation to a time-sharing scheme. ASIC is reviewing the guidance in RG 146 in relation to the training for these people.