Minimum education standards, a professional training
year, a mandatory exam and continuing professional development
requirements will be developed by a new independent standards body
for financial advisers under
draft legislation released
for consultation by the Federal Government. Existing financial
advisers will be required to transition to the new standards, with
both new and existing financial advisers being required to abide by
a professional code of ethics and be listed on an ASIC professional
Under the laws, the new standard setting body will begin
operations on 1 July 2016 and will develop new education and
training requirements for a 1 July 2017 commencement. The code of
ethics requirements will apply to all financial advisers from 1
The new education and standards will be enforced by:
ASIC refusing to grant an AFSL to a natural person unless they
meet the education and training standards;
a prohibition on AFS licensees appointing an authorised
representative to provide personal advice to retail clients unless
they meet the education and training standards; and
a prohibition on AFS licensees authorising an employee or
director of the licensee, or of a related body corporate of the
licensee, to provide personal advice to retail clients, on behalf
of the licensee, in relation to "relevant financial
products" if the employee or director has not met the
education and training standards.
In addition, the terms "financial adviser" and
"financial planner" will also be restricted terms, if
providing financial services to retail clients, and will only be
able to be used by those persons meeting the education and training
standards. Wrongful use of the restricted terms will be a
continuing offence, carrying a fine of 10 penalty units per day
(currently $1,800) for each day the offence is committed.
AFS Licensees must also ensure that its "relevant
providers" are covered by a compliance scheme approved by ASIC
which provides how the code of ethics is monitored and enforced.
Only compliance plans developed by a professional association or by
the AFS licensee are eligible for approval by ASIC. Breaches of the
code of ethics must be reported to ASIC, with a failure to lodge a
notice constituting an offence carrying a fine of up to 50 penalty
units (currently $9,000).
These changes represent part of the Federal Government's
response to the Financial System Inquiry, on which we have
previously reported. Submissions to the consultation close on 4
If you would like to make a submission to the consultation or
understand how these changes will impact your business, please
contact a member of our team.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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