FASEA Decision a Good First Step But More Required

CPA Australia welcomes the government's decision to disband FASEA. Reducing the number of bodies involved in regulating financial advice is a good first step towards reducing the regulatory burden on financial advisers, but more is required.

The affordability and accessibility of financial advice is a significant issue in Australia. The regulatory burden on financial advisers is a major contributing factor.

Practically, this decision does little to address overlapping, duplicated and sometimes conflicting regulatory requirements on financial advisers. Transferring responsibilities from FASEA to ASIC and Treasury, without wholesale regulatory reform to address this issue, is akin to kicking the can down the road.

The government must do more to address the causes of the regulatory and compliance burden on financial advisers. Until they do, we will not solve the problem of advice affordability and accessibility.

It is vital that the transfer of responsibilities from FASEA to ASIC and Treasury does not cause additional burden or disruption for financial advisers. Financial advisers are assisting a deluge of clients who need their support to manage COVID-19’s economic impacts, and this important work will continue well into 2021.

A new education, training and ethical standards regime for financial advisers commenced on 1 January 2019 under the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017

Who the changes affect

The new legislative framework applies to all financial advisers who provide personal advice to retail clients on relevant financial products. Relevant financial products include all financial products other than:

  • basic banking products
  • general insurance products 
  • consumer credit insurance
  • a combination of any of these products.

All Australian Financial Services (AFS) licensees, their representatives and limited AFS licensees and their representatives need to comply with the new framework.

How to become a financial adviser 

To become a financial adviser from 1 January 2019, you must:

  • complete a Bachelor Degree (or higher) approved by FASEA
  • complete a professional year (PY) of supervised experience
  • complete an exam.

This means that RG 146 diploma level studies will not be recognised towards becoming a financial adviser from 1 January 2019.

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Requirements for existing financial advisers 

Existing financial advisers will need to complete the FASEA national exam by 1 January 2021 and meet the new education standards by 1 January 2024.

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The role of FASEA

The Financial Adviser Standards and Ethics Authority (FASEA) is the body responsible for setting the education, training and ethical standards for financial advisers.

It is also responsible for setting a Code of Ethics. From 1 January 2020, all financial advisers must comply with the FASEA Code of Ethics, which will be monitored and enforced by ASIC approved compliance schemes.

As of 1 January 2019, FASEA has set:

  • new CPD obligations for AFS licensees and their financial advisers
  • the process for approving foreign qualifications for the purposes of the new education standards
  • the term for financial advisers completing their professional year of experience to be provisional financial adviser or provisional financial planner.