Last week, FASEA released a consultation paper on the adviser examination that will be in place from January 1, 2019. This release completed a suite of FASEA position papers, from which a broader initial view of the new education and training standards for advisers can be formed.
According to Rob Lavery, the Technical Manager for wealthdigital, Australia’s leading online advice portal, the picture is a challenging one, particularly for those who provide predominantly SMSF advice under a limited license.
“The hope that advisers under limited AFSLs might avoid the full suite of training and education requirements is looking more and more unlikely,” said Lavery. “Unlike RG146, the standards enforced by FASEA, as they currently appear, do not scale up and down according to your speciality or licence class.”
“FASEA’s proposed guidance on new qualifications pathways for existing advisers split requirements into 3 categories. Advisers with no, or an unrelated, bachelor’s or postgraduate degree will need to do a full graduate diploma. Those with a related bachelor’s or postgraduate degree, such as accounting, will have a 3-subject bridging course to complete.
Those with an approved planning degree, or a related bachelor’s degree and post-graduate qualification, will have a single subject on FASEA’s code of ethics to complete.” “Many accountants who provide limited advice on SMSFs will find themselves required to do a 1 or 3 subject bridging course,” Lavery continued. “Those who have been in the industry the longest may need to complete the full graduate diploma.”
The second part of the new standards will be the requirement to adhere to FASEA’s new code of ethics.
“FASEA’s draft code of ethics included provisions not common in other industry standards,” said Lavery. “The requirement to uphold and promote the ethical standards of the profession may require advisers to actively report on colleagues and associates they believe to be acting contrary to the code.”
“Furthermore, all advisers, including those under limited AFSLs, will need to subscribe to a code monitoring body. Such a body will result in increased cost and regulatory requirements for those providing advice.”
Lastly, Lavery identified the rigours of the new exam. “FASEA’s consultation paper on the adviser exam noted that 80% of the adviser exam will be on non-strategic areas. For the most part, the exam will focus on Corporations Act rules, FASEA’s own code of ethics and the application of ethical thinking and behavioural finance.”
“All advisers, including those under limited AFSLs, will need to pass each section and achieve an overall mark of 65% or higher. The exam is proposed to be 3 to 4 hours, will be a mix of multiple choice and short-answer questions, and will require significant preparation for all candidates. Existing advisers will have until January 1, 2021 to pass the exam.”
“Those providing advice under limited AFSLs have to actively commit to maintaining that part of their business,” Lavery concluded. “They will be required to subscribe to a code monitoring body within 18 months, will need to have passed the adviser exam within 2 and a half years, and will need to meet the education standards by the start of 2024.”
