The federal government has released draft legislation with regard to the experience pathway that will deem a financial adviser has met their education requirements.
The proposed bill stipulates a practitioner will be considered to have met their education requirements if they have 10 years cumulative experience providing advice between 1 January 2007 and 31 December 2021, and they have not recorded any disciplinary action on the Financial Advisers Register before 31 December 2021.
Individuals will still have to pass the prescribed financial adviser exam to be considered an experienced adviser.
The draft legislation is also aiming to address situations where people are failing to meet their education requirement on technical grounds even though they have completed the substance of an approved degree.
“The legislation would address this by increasing the flexibility of the degree approval process, by allowing domestic qualification applications to the minister and the ability for education providers to confirm that a person has completed the requirements in an approved degree,” Assistant Treasurer and Financial Services Minister Stephen Jones said.
“The government is committed to reviewing the education settings for new entrants and not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.”
Jones noted the legislation should help arrest the fall in adviser numbers since 2019.
The Financial Advisers Association of Australia (FAAA) endorsed the government’s experience pathway move, but recommended a slight amendment should be included.
“We believe that relevant experience is an important element to maintaining the required standard for professional, quality financial advice that will provide the best outcome for Australians. That said, we continue to feel strongly that there should be a time limit on the pathway such that a relatively young adviser does not continue to practice indefinitely without relevant qualifications,” FAAA chief executive Sarah Abood said.
The association noted making the framework more flexible for new entrants is a positive development.
“We are very pleased to see the proposals to increase the flexibility around approving relevant qualifications for new entrants. We have raised many instances where small course changes (in some cases as little as a unit name or number change) have led to qualifications being disallowed which do not fit the exact language of the relevant determination. This is extremely disheartening for students who have successfully completed these courses and we are hopeful that more sensible flexibility will now be available,” Abood noted.
The Stockbrokers and Investment Advisers Association (SIAA) also welcomed the introduction of the bill after advocating for the actual implementation of an experience pathway.
“Firms, stockbrokers and investment advisers are making plans now in relation to exiting the profession,” SIAA chief executive Judith Fox said.
“A further exodus of experienced advisers was on the cards without draft legislation confirming the experienced pathway.
“At a time when the advice gap is recognised, losing more experienced advisers makes no sense and it is to the government’s credit that they have acted to prevent additional loss of expertise.”
The government is encouraging industry stakeholders to provide feedback on the draft legislation before 3 May.