The federal government has announced plans to allow financial advisers who have 10 years of experience and a clean compliance record to continue practicing without the need for a degree or any further study beyond a single ethics unit.
Superannuation, Financial Services and the Digital Economy Minister Jane Hume revealed the move yesterday and said the government was ‘streamlining’ the education requirements for financial advisers as part of its efforts to provide access to high quality, affordable financial advice.
She noted following the passage of the Better Advice Bill through Parliament, from 1 January 2022, the power to set education standards for financial advisers will transfer from the Financial Adviser Standards and Ethics Authority (FASEA) to the Minister’s office.
“Consistent with the legislation, the Minister will simplify the minimum education requirements while ensuring high quality financial advice for consumers, achieving the intention of the FASEA reforms without micro-managing advisers, universities, students and businesses,” Hume explained.
The plan is similar in intent to that announced by opposition financial services and superannuation spokesman Stephen Jones late last week.
Details of the proposed plan were released by Treasury as part of a consultation document that stated the proposed ‘experience’ pathway would require advisers, by 1 January 2026, to have 10 or more years of full-time experience in the last 12 years to continue to provide advice under the revised model.
“Advisers using the experience pathway must also have a clean record prior to 1 January 2026, meaning no sanctions from the Financial Services and Credit Panel (FSCP), excluding warnings,” the Treasury document stated.
The ‘qualification’ pathway, as developed under FASEA and in which existing and new advisers must complete a bachelor’s degree or higher, will be retained for any adviser who does not meet the requirements for the experience pathway.
Treasury also acknowledged that unless the standards set by FASEA were amended or replaced they would continue to set the requirements for financial advisers.
Feedback on the changes is due by 1 February and the Stockbrokers and Financial Advisers Association (SAFAA) has welcomed the proposals stating they would restored common sense to the education standards related to financial advice.
SAFAA chief executive Judith Fox said: “The government’s proposals restore Parliament’s intent, which clearly stated that a degree or degree equivalent was required and also deep experience and prior learning would be recognised as the equivalent of a degree”.
”It was the standards authority, a bureaucracy that was averse to stakeholder engagement, that narrowed the scope of recognised qualifications. It deemed a range of advisers with degrees best suited to stockbroking and investment advice as unqualified and skills, knowledge and experience unsuitable for recognition.”
Fox added the existing education standards were causing an “exodus of experience” while increasing the cost of advice and discouraging graduates from entering the profession as they found their degrees were not accepted.
