The planned legislation, unveiled last month, is part of the Government’s response to an inquiry into the financial system, and is designed to improve public confidence and trust in the sector, according to the minister for small business and assistant treasurer, Kelly O’Dwyer.
“While these reforms will represent a substantial change to the current regulatory environment for financial advisers’, significant benefits to consumers and industry will be delivered,” O’Dwyer said.
The new education and training requirements are due to become effective from 1 July 2017, with the code of ethics requirements coming into force from 1 July 2019.
According to the proposed legislation:
- New financial advisers will require a degree, have to undertake a professional year and pass an exam.
- The Government will recognise an independent industry-established standard setting body, operational from 1 July 2016 that will set education standards, professional year and continuing professional development requirements, as well as develop a comprehensive code of ethics for financial advisers.
- Existing advisers will be provided a transition process and will be required to complete an appropriate degree equivalent (or have a recognised transition pathway determined by the independent standard setting body), and pass an exam.
- All advisers both new and existing will be required to undertake continuing professional development (CPD) and be party to a code of ethics.
A senior official in the financial adviser team for the domestic regulator, the Australian Securities & Investments Commission (ASIC), speaking to one local media organisation, said that its investigations had shown many advisers were not “competent” enough to deliver financial advice to investors.
“Our surveillances of the financial advice industry have consistently found that many financial advisers are not adequately trained or competent to deliver financial advice to investors. This contributes to poor advice outcomes for consumers,” Joanna Bird, a senior executive leader in ASIC’s financial advisers team, was quoted saying.
The new legislation is expected to be considered by Parliament in early 2016, prior to the establishment of the new standard setting body by 1 July 2016.
