Raising professional standards of financial advisers

A professional standards regime for financial advisers will commence from 1 January 2019. All Australian Financial Services (AFS) Licensees and their representatives and Limited AFS Licensees and their representatives will be required to comply.

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Financial planning advice is a highly regulated industry, particularly when it comes to providing financial advice to the public.

Before you can provide advice that could influence a client's decision to purchase a financial product you must meet minimum training standards and hold an Australian Financial Services (AFS) licence, or be authorised as a representative of an AFS.

Training standards

In order to provide financial planning advice, you must meet both initial and ongoing training standards as defined in the Australian Securities and Investments Commission's (ASIC) Regulatory guide 146 Licensing: Training of financial product advisers (RG146).

There is no specific qualification to become a financial adviser. Rather, you must complete training in the areas in which you will be providing advice, where the minimum requirements to comply with Tier 1 RG146 are broadly equivalent to the "diploma" level.

Importantly qualifications or training that were completed before 24 September 2012 must be listed on the ASIC Training Register to be recognised for the purposes of meeting the RG146 training requirements. After this date, it is the responsibility of the registered training organisation or higher education provider offering the training to certify that the course meets the requirements of RG146 and advise which specialist knowledge areas the course covers.

RG146 Compliance Solution

CPA Australia offers the RG146 Compliance Solution. This self-paced learning program allows you maximum flexibility to gain the skills and knowledge you need, with access to quality online and hard copy learning resources and real time learning support included.

The program consists of four modules plus an optional specialist assessment in advising in SMSFs. It has been designed to address the competency requirements outlined in RG146 for practitioners wishing to provide specialist financial planning advice to their clients in the areas of financial advice, general and life insurance, securities, derivatives, margin lending, managed investments, superannuation and SMSFs. On completion of modules 1 and 2, you will also achieve the FNS50611 Diploma of Financial Planning.

Important note: From 1 January 2019 the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 will require new financial advisers to complete a bachelor or higher degree (or equivalent qualification) as approved by the new Financial Adviser Standards and Ethics Authority. As a result, this course will not meet the education standards to become a financial adviser from 1 January 2019.

Importantly, there are transition provisions for existing financial advisers, defined to be an individual authorised to provide personal advice to retail clients before 1 January 2019. This enables individuals to continue completing current training programs, such as the RG146 Compliance Solution, with the view to becoming a licenced financial adviser before 1 January 2019 and to transition into the new framework as an existing provider.

It is also important that you keep up-to-date with training, as required by RG146. This means those giving advice should maintain, update and deepen their knowledge and skills on an ongoing basis.

Licensing

Once you have successfully completed your training, you must be licensed before you can provide financial planning advice. The term 'licensed' refers to AFS licensees and representatives or authorised representatives of AFS licensees.

A new entrant to the financial services industry will generally need to meet an experience requirement before obtaining an AFS licence. They will need to operate under an existing AFS licensee as either an authorised representative or a representative.

  • Read the key considerations on how to select a licence holder. 
  • Watch a video on how to become financial planner.

Tax (financial) advice

The regulation of financial services that provide tax advice in relation to licensed financial services is being progressively introduced over a three year period, overseen by the Tax Practitioners Board.

As a result, it is a common requirement to also register as a tax (financial) adviser when becoming a financial adviser.

Contact

If you would like to talk about your personal circumstances email finplan@cpaaustralia.com.au to arrange a time for a specialist to call you.