Standards shake-up for Financial Advisors

Amongst the tidal wave of criticism of the financial planning industry in the wake of the royal commission, education and ethical standards is one area a new amendment to the Corporations Act will seek to address from 1 January 2019.  

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (Cth) (the Amendment Act) will require advisers to complete tertiary education requirements, the minimum of which is a bachelor degree or equivalent level of qualification approved by the standards body.  For currently practising planners, alternative qualification measures will allow them to continue to work without having to return to university, however financial planners will have until 1 January 2024 to get these qualifications.  The implications are real, as non-qualified planners will not be granted an Australian Financial Services licence. The Amendment Act also requires all new financial planners to undergo a year of work experience/training; and upon commencing as a financial planner, continuing professional development requirements must be met. A new industry exam will also be developed to ensure the competence and skill of advisers.

Self-regulation on ethical issues will also be a thing of the past.   The Amendment Act introduces an industry code of ethics which must be complied with from 1 January 2020. The Financial Adviser Standards and Ethics Authority will assist in the development of the code of ethics and will also monitor and administer the code.

For more information on preparing for these changes, please contact:

Nicole Stornebrink
Associate
T 03 5225 5209
E nstornebrink@ha.legal

or

Paul Gray
Principal Lawyer
T  03 5225 5231
E  pgray@ha.legal

This article was written with the assistance of Graduate Lawyer, Alex Gulli