Draft Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015

On 3 December 2015, the Federal Government released a draft bill for the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015, which aims to raise education, training and ethical standards for financial advisers.

Background to the Draft Bill

ASIC’s Regulatory Guide 146: Licensing: Training of financial product advisers (RG 146) sets out the minimum knowledge, skill and education level standards for financial advisers and provides information on how advisers can meet these standards.

The minimum standards required to provide personal advice on more complex (Tier 1) financial products are:

• Australian Qualifications Framework level 5 (‘Diploma’ level) course units;

• Specialist knowledge about the specific products an adviser provides advice on, and the markets in which they operate; and

• Generic knowledge requirements, including training on the economic environment, the operation of financial markets and financial products.

Concerns have been raised that the current standards in RG 146 are not commensurate to the level required to ensure appropriate technical and professional competence. Further, in some instances, the existing minimum education and training standards have not been applied consistently across the industry, and that the rigour and quality of some training courses is questionable.

Amendments Contained in the Draft Bill

Under the proposed legislation:

• New financial advisers will require a degree, 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 develop and set education standards, professional year requirements, continuing professional development requirements and 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; and
• The new education and training requirement will be effective from 1 July 2017, with the code of ethics requirements coming into force from 1 July 2019.

Final submissions are due on the proposed legislation by 4 January 2016.

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[Draft] Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015 as reproduced in TimeBase LawOne