FAQs: Timeframe for passing the financial adviser exam
This is Information Sheet 260 (INFO 260). It answers some frequently asked questions (FAQs) to help financial advisers who are existing providers understand:
the possible outcomes if you do not pass the exam within the required timeframe.
Editor’s note: This information sheet was updated on 4 April 2022 to reflect amendments made to the Corporations Act by the Better Advice Act and ASIC Instrument 2022/241. The amendments ensure that the dates by which existing providers are required to meet the professional standards remain consistent with dates set before the commencement of the Better Advice Act on 1 January 2022.
From 1 January 2019, professional standards apply to financial advisers. For an overview of how these standards apply to Australian financial services (AFS) licensees and existing and new financial advisers, see How the reforms affect you.
This information sheet answers the questions:
1. What is the required timeframe for passing the exam?
If you are an existing provider (see Question 2) who was on the Financial Advisers Register (i.e. you were authorised to provide personal advice to retail clients on relevant financial products), generally you must have passed the exam by 1 January 2022 to continue to provide personal advice.
This means that if you qualify for the extension, you can continue to provide financial advice until 1 October 2022. From 1 October 2022, you must have passed the exam to continue to provide personal advice.
2. Who is an 'existing provider' and who is a 'relevant provider'?
Two key terms under the professional standards reforms are 'existing provider' and 'relevant provider': see Table 1. These terms are defined in the Corporations Act 2001 (Corporations Act).
A person can be either an existing provider or a relevant provider, or both.
Table 1: Who is an existing provider and who is a relevant provider?
Term
Definition
Reference
Existing provider
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, and
on 1 January 2019 was not banned, disqualified or subject to a court enforceable undertaking.
Note: 'Relevant financial products' are financial products other than basic banking products, general insurance products or consumer credit insurance: see section 910A.
section 1546A
Relevant provider
An individual who:
is an AFS licensee or its representative, and
is authorised to provide personal advice to retail clients, as the licensee or on behalf of the licensee, on relevant financial products.
Note: Relevant providers must be listed on the Financial Advisers Register. Under section 922D, AFS licensees must notify ASIC when a person becomes a relevant provider, and under section 922Q, ASIC is required to add relevant providers to the Financial Advisers Register.
section 910A
3. I am an existing provider. What will happen if I did not pass the exam by 1 January 2022?
Table 2 gives some example outcomes for existing providers of passing or not passing the exam by 1 January 2022.
Table 2: Outcomes related to completing the exam for existing providers
You will continue to be recognised as a 'relevant provider' and can continue to provide personal advice to retail clients on relevant financial products.
Yes
No
If you did not sit the exam twice before 1 January 2022, from 1 January 2022 you lose your relevant provider status. Before you can again be authorised to provide personal advice to retail clients on relevant financial products you will need to:
If you did sit the exam twice before 1 January 2022, you can continue to provide personal advice to retail clients on relevant financial products until 30 September 2022.
However, if you have not passed the exam by 1 October 2022, you lose your relevant provider status and cease being able to provide personal advice to retail clients on relevant financial products: see Question 4.
No
Yes
You can be authorised by an AFS licensee to provide personal advice to retail clients on relevant financial products.
No
No
You need to have passed the exam before you can be authorised to provide personal advice to retail clients on relevant financial products again.
Example scenarios
Example 1: Taking a career break
Jane is authorised to provide personal advice to retail clients on relevant financial products between 1 May 2015 and 1 May 2021. Therefore, she is an existing provider.
Jane takes a 12-month break from the industry, starting on 1 May 2021, to spend time with her elderly mother interstate – that is, her licensee revokes her authorisation to provide personal advice and she ceases on the Financial Advisers Register to be a relevant provider from 1 May 2021.
At 1 January 2022, Jane is an existing provider, but not a relevant provider. She does not need to have passed the exam by 1 January 2022. However, after Jane returns from her career break on 1 May 2022, she must pass the exam before she can be authorised as a relevant provider again.
Example 2: Moving into a different role within your organisation
Nadir is authorised to provide personal advice to retail clients on relevant financial products between 30 September 2014 and 23 January 2021. Therefore, he is an existing provider.
Nadir wishes to undertake a secondment to a compliance team in his organisation. Upon Nadir starting in the compliance team on 27 January 2021, his licensee revokes his authorisation to provide personal advice, and he ceases to be 'current' on the Financial Advisers Register for a 24-month period.
At 1 January 2022, Nadir is an existing provider, but not a relevant provider. He does not need to have passed the exam by 1 January 2022. However, Nadir must pass the exam before he can be authorised as a relevant provider again.
4. I am an existing provider and I sat the exam at least twice before 1 January 2022. What will happen if I do not pass the exam by 1 October 2022?
Existing providers who made at least two unsuccessful attempts to pass the exam before 1 January 2022 have until 1 October 2022 to pass the exam: see Question 1.
Table 3 gives some example outcomes for these existing providers of passing or not passing the exam by 1 October 2022.
Table 3: Outcomes related to passing the exam for existing providers who sat the exam twice before 1 January 2022
On 1 October 2022, are you also a relevant provider?
Have you passed the exam by 1 October 2022?
Outcome for you
Yes
Yes
You will continue to be recognised as a 'relevant provider' and continue to be able to provide personal advice to retail clients on relevant financial products.
Yes
No
From 1 October 2022, you lose your relevant provider status. Before you can again be authorised to provide personal advice to retail clients on relevant financial products you will need to:
You can be authorised by an AFS licensee to provide personal advice to retail clients on relevant financial products.
No
No
You need to have passed the exam before you can be authorised to provide personal advice to retail clients on relevant financial products again.
5. How do the education and training standards apply to 'new financial advisers'?
The professional standards require any person who wishes to be authorised as a financial adviser to meet particular education and training requirements, namely to:
hold a qualification approved by the Minister (degree standard)
pass the financial adviser exam
participate in 40 hours of continuing professional development (CPD) each year
complete a full-time professional year that includes at least 100 hours of structured training.
The professional standards also require any person who wishes to be authorised as a financial adviser to comply with the Financial Planners and Advisers Code of Ethics 2019. The Code is a set of principles and core values in the areas of ethical behaviour, client care, quality process and professional commitment.
Transitional arrangements
Financial advisers who worked between 1 January 2016 and 1 January 2019 and meet the definition of 'existing provider' (see Question 1) may be able to take advantage of transitional arrangements that apply to them when meeting the education and training standards: see How the reforms affect you.
For example, these transitional arrangements include not being required to complete the professional year, and having until 1 January 2026 to meet the degree standard.
However, as set out in Table 2 and Table 3, existing providers who are relevant providers and do not pass the exam by the relevant exam cut-off date (being either 1 January 2022 or 1 October 2022) will lose their relevant provider status.
In addition, they will be required to complete the following education and training before again being authorised as a relevant provider to provide personal advice to retail clients:
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. We encourage you to seek your own professional advice to find out how the applicable laws apply to you, as it is your responsibility to determine your obligations.
You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases, your particular circumstances must be taken into account when determining how the law applies to you.
Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.
