As part of the reforms introduced into the Corporations Act, professional standards now 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.
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:
- appoint them to the Financial Advisers Register
- ensure they have a qualification that meets the education standard
- ensure they have passed the Financial Adviser Standards and Ethics Authority (FASEA) exam
- 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.
Existing financial advisers
An existing financial adviser (existing provider) is a person who:
- was listed on the Financial Advisers Register as being authorised to give personal advice (as an AFS licensee or on behalf of an AFS licensee)
between 1 January 2016 and 1 January 2019 (either as ‘Current appointment(s)’ or ‘Previous appointment(s)'), and
- on 1 January 2019 was not banned, disqualified or subject to an enforceable undertaking.
The professional standards require existing financial advisers 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 FASEA exam, and
- Depending on their current qualifications, an existing financial adviser may need to do a graduate diploma, bachelor degree, masters degree, or only the FASEA Code of Ethics bridging course.
Existing financial advisers must also continue to complete CPD activities each year and comply with Code of Ethics.
The reforms do not apply to Advisors who provide general advice and it is the responsibility of the AFS licensee to have adequate controls in place to manage and issues exemptions to the reforms.