FAQs: Timeframe for passing the financial adviser exam

From 1 January 2019, professional standards apply to financial advisers. For an overview of how these standards apply to AFS licensees and existing and new financial advisers, see How the reforms affect you.

This information sheet (INFO 260) answers some frequently asked questions (FAQs) to help financial advisers who are existing providers understand their obligation to pass the financial adviser exam and the possible outcomes if they do not pass the exam within the required timeframe.

This information sheet answers the questions:

  1. What is the required timeframe for passing the exam?
  2. Who is an 'existing provider' and who is a 'relevant provider'?
  3. I am an existing provider. What will happen if I do not pass the exam before 1 January 2022?
  4. I am an existing provider and I made two attempts to pass the exam before 1 January 2022. What will happen if I do not pass the exam by 30 September 2022?
  5. What are the requirements for 'new entrants'?

1. What is the required timeframe for passing the exam?

If you are an existing provider (see Question 2), and you are currently on the Financial Advisers Register (i.e. you are currently authorised to provide personal advice to retail clients on relevant financial products), generally you must pass the exam before 1 January 2022.

However, the Government has announced a nine-month extension of the required timeframe to 30 September 2022 for existing providers who have made two attempts to pass the exam before 1 January 2022 (for further detail, see Question 4 below).

Note: The proposed extension was announced by Government on 24 June 2021: see Treasurer, Better Advice Bill introduced into Parliament, media release, 24 June 2021.

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 are 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 do not pass the exam before 1 January 2022?

Table 2 gives some example outcomes for existing providers generally of passing or not passing the exam by 31 December 2021.

Table 2: Outcomes related to completing the exam for existing providers generally

On 31 December 2021, are you also a relevant provider?

Have you passed the exam by 31 December 2021?

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

If you have not attempted the exam twice before 1 January 2022, from 1 January 2022 you will be treated as a new entrant (see Question 5). You must meet the required professional standards (including undertaking a professional year) before being able to provide personal advice to retail clients on relevant financial products.

If you have attempted the exam twice before 1 January 2022, the Government has announced an extension to 30 September 2022 for you to pass the exam. This means that you will retain your existing provider status until 30 September 2022: see Question 4.

No

Yes

You are able to be authorised by an AFS licensee to provide personal advice to retail clients on relevant financial products.

No

No

You will retain your status as an existing provider. You will need to have passed the exam before you can again become authorised to provide personal advice to retail clients on relevant financial products.

Example scenarios

Example 1: Taking a career break

Jane is authorised between 1 May 2015 and 1 May 2021 to provide personal advice to retail clients on relevant financial products. 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, she ceases on the Financial Advisers Register to be a relevant provider voluntarily from 1 May 2021.

At 31 December 2021, Jane is an existing provider, but not a relevant provider. She does not need to have passed the exam before 1 January 2022 to retain her 'existing provider' status. However, after Jane returns from her 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 between 30 September 2014 and 23 January 2021 to provide personal advice to retail clients on relevant financial products. Therefore, he is an existing provider.

Nadir wishes to undertake a secondment to a compliance team in his organisation, which starts on 27 January 2021. Upon Nadir starting in the compliance team, his licensee withdraws Nadir's authorisation to provide personal advice, and Nadir ceases to be on the Financial Advisers Register for a 24-month period.

At 31 December 2021, Nadir is an existing provider, but not a relevant provider. He does not need to have passed the exam before 1 January 2022 to retain his 'existing provider' status. However, after Nadir returns from his secondment on 27 January 2023, he must pass the exam before he can be authorised as a relevant provider again.

4. I am an existing provider and I made two attempts to pass the exam before 1 January 2022. What will happen if I do not pass the exam by 30 September 2022?

The Government has announced that existing providers who made two unsuccessful attempts to pass the exam before 1 January 2022 will have until 30 September 2022 to pass the exam: see Question 1.

Note: The extension will be implemented via regulations.

Table 3 gives some example outcomes for these existing providers of passing or not passing the exam by 30 September 2022.

Table 3: Outcomes related to completing the exam for existing providers who attempted the exam twice before 1 January 2022

On 30 September 2022, are you also a relevant provider?

Have you passed the exam by 30 September 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 will be treated as a 'new entrant' (see Question 5). You must meet the required professional standards (including undertaking a professional year) before being able to provide personal advice to retail clients on relevant financial products.

No

Yes

You are able to be authorised by an AFS licensee to provide personal advice to retail clients on relevant financial products.

No

No

You will retain your status as an existing provider. You will need to have passed the exam before you can again become authorised to provide personal advice to retail clients on relevant financial products.

5. What are the requirements for 'new entrants'?

The professional standards require any person who wishes to be authorised as a financial adviser to:

  • hold a qualification approved by the Financial Adviser Standards and Ethics Authority (Education Standard)
  • pass the financial adviser exam (Exam Standard)
  • participate in 40 hours of continuing professional development (CPD) a year (CPD Standard)
  • comply with the Financial Planners and Advisers Code of Ethics – a set of principles and core values in the areas of ethical behaviour, client care, quality process and professional commitment (Code of Ethics Standard), and
  • complete a full-time professional year that includes at least 100 hours of structured training (Professional Year Standard).

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: see How the reforms affect you.

Where can I get more information?

For an overview of how the professional standards apply to AFS licensees and existing and new financial advisers, see Professional standards for financial advisers.

You can also call ASIC on 1300 300 630 or ask a question online.

Important notice

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.

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.

Last updated: 22/09/2021 11:28