The government made the changes in new draft legislation released on Thursday by assistant treasurer Kelly O’Dwyer.
“The government is clarifying that the reforms, which were announced for consultation late last year, are not intended to require existing advisers to complete a bachelor’s degree,” O’Dwyer said in a statement.
The government has also unveiled a plan to establish a standard setting body to administer the new professional standards regime, which will be responsible for developing and setting an industry exam, developing a code of ethics, and determining the education requirements for both new and existing advisers.
Degree equivalent OK
O’Dwyer said existing advisers will now be required to reach “degree‑equivalent status”, which could be achieved via a number of pathways, including by completing bridging courses approved by this new standards body.
"These reforms will raise minimum standards in the financial advice industry."
“We recognise that existing advisers will need to balance any further education requirements with the demands of continuing to provide high-quality financial advice to their clients. Existing advisers therefore need sufficient time to meet the new standards,” she said.
“The government is proposing to extend the amount of time that existing advisers will have to reach degree-equivalent status and to pass the new exam requirement for all advisers,” O’Dwyer added.
Delayed start
The new minimum education requirements have also been delayed and are now due to take effect from 1 January 2019, revised from 1 July 2017. While existing advisers will have until 1 January 2024 (five years) to reach the new degree‑equivalent status and until 1 January 2021 (two years) to pass the exam.
“The government will seek views on whether the standards body should have the power to exempt, on a case-by-case basis, existing advisers from the requirement to pass the exam. This exemption is intended to be reserved for highly experienced advisers with exceptional skills and qualifications,” she said.
“These reforms will raise minimum standards in the financial advice industry and improve public confidence in the sector, whilst acknowledging the skills and expertise of existing advisers.”
Flexibility welcomed
The Financial Planning Association of Australia (FPA) has welcomed the Government’s moves, in particular the easier arrangements for existing financial planners.
FPA chief executive Dante De Gori welcomed the decision to provide a number of flexible pathways for existing financial planners to achieve the proposed degree-equivalent status, and that they will be given sufficient time to achieve this.
“The new reforms will require existing financial planners to meet stringent education and exam requirements, but do not go so far as to require all existing planners to complete a bachelor’s degree,” he said.
“The FPA has long been an advocate for raising the professional and educational standards of financial planners, but it is important to recognise that many existing financial planners have training and qualifications of a very high level, as well as years of experience,” he said.
