The Government announced on 11 October 2019 that a new financial adviser disciplinary body will replace the role of code monitoring bodies, which had been due to be established by industry associations under FASEA reforms.

The Government will accelerate the establishment of the disciplinary body for early 2021, subject to legislation. This action is based on recommendation 2.10 under the Hayne Royal Commission into misconduct in the banking, superannuation and financial services industry.

Consultations will begin immediately. ASIC announced on 15 October 2019 that it will make a legislative instrument to provide relief to Australian financial services (AFS) licensees from financial adviser compliance scheme obligations.

The FASEA Code of Ethics will still commence from 1 January 2020 and licensees will be required to take reasonable steps to ensure their representatives comply with it.

A new education, training and ethical standards regime for financial advisers commenced on 1 January 2019 under the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017

Who the changes affect

The new legislative framework applies to all financial advisers who provide personal advice to retail clients on relevant financial products. Relevant financial products include all financial products other than:

  • basic banking products
  • general insurance products 
  • consumer credit insurance
  • a combination of any of these products.

All Australian Financial Services (AFS) licensees, their representatives and limited AFS licensees and their representatives need to comply with the new framework.

How to become a financial adviser 

To become a financial adviser from 1 January 2019, you must:

  • complete a Bachelor Degree (or higher) approved by FASEA
  • complete a professional year (PY) of supervised experience
  • complete an exam.

This means that RG 146 diploma level studies will not be recognised towards becoming a financial adviser from 1 January 2019.

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Requirements for existing financial advisers 

Existing financial advisers will need to complete the FASEA national exam by 1 January 2021 and meet the new education standards by 1 January 2024.

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The role of FASEA

The Financial Adviser Standards and Ethics Authority (FASEA) is the body responsible for setting the education, training and ethical standards for financial advisers.

It is also responsible for setting a Code of Ethics. From 1 January 2020, all financial advisers must comply with the FASEA Code of Ethics, which will be monitored and enforced by ASIC approved compliance schemes.

As of 1 January 2019, FASEA has set:

  • new CPD obligations for AFS licensees and their financial advisers
  • the process for approving foreign qualifications for the purposes of the new education standards
  • the term for financial advisers completing their professional year of experience to be provisional financial adviser or provisional financial planner.