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FASEA: Key financial adviser requirements

Financial advisers face a series of steps to meet new education and ethical requirements. CPA Australia’s head of public practice Keddie Waller explains what they are.

Keddie Waller | November 2019

Anyone authorised to provide personal financial planning advice to clients should be aware that a new professional, ethical and education standards framework commenced on 1 January 2019.

The new regime, aimed at restoring trust and confidence in the financial planning sector, not only sets a higher bar to becoming a financial adviser but requires those currently authorised to provide personal financial product advice to meet additional requirements.

Importantly, these include even those limited to providing scoped advice and services in areas such as self-managed super funds (SMSFs) or under a limited Australian Financial Services (AFS) licence.

However, what does this all mean if you are currently licensed?

Bridging units

The immediate priority is to understand the bridging units that need to be completed to meet the education requirements set by the Financial Adviser Standards and Ethics Authority (FASEA) as part of the transition to the new regime.

This requires AFS licensee assessment to determine if you hold a relevant degree as defined in FASEA’s FPS001 Education Pathways Policy. Importantly, it can be satisfied across multiple degrees.

If your AFS licensee determines that you do hold a relevant degree, the maximum number of bridging units you need to complete automatically reduces to four.

If you have also completed the CPA Program, you are also eligible for further credits:

CPA Program
(No approved electives)
CPA Program
Includes at least one of the electives: Personal Financial Planning, Superannuation, Financial Planning Fundamentals, Superannuation and Retirement, Planning, Investment Strategies, Risk Advice and Insurance, or Financial Risk Management.
Must complete Ethics for Professional Advisers Bodies bridging course and an additional bridging unit of their choice.
 Must complete Ethics for Professional Advisers Bodies bridging course.

Importantly, FASEA has approved the CPA Program (commenced during or after 1989).

Additional applications for the CPA Program (pre-1989) have been lodged with FASEA for consideration to also be approved for credits. CPA Australia will keep members updated on the progress of these applications. 

CPA Australia will also shortly be announcing a panel of FASEA-approved education providers that will provide CPA Australia members a discount on enrolment into the bridging units.

The exam

You must also complete an exam set by FASEA. Dates and locations have now been released for 2020, including a number of regional locations.

FASEA has also provided considerable guidance, including practice questions, to help prepare for the exam.

Senator Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, recently announced that the transition period for existing financial advisers will be extended to:

  • 1 January 2022 to complete the exam
  • 1 January 2026 to meet FASEA's qualification requirements.

These changes are still subject to legislative change.

CPD

From 1 January 2019 you are also required to complete 40 hours of continuing professional development (CPD) annually, where 70 per cent must be approved by the AFS licensee and must include minimum CPD in the following areas:

  • technical – five hours
  • client care and practice – five hours
  • regulatory compliance and consumer protection – five hours
  • professionalism and ethics – nine hours.

The balance (up to 40 hours) must consist of qualifying CPD and can include no more than four hours of professional reading.

Code of Ethics

From 1 January 2020, a statutory Code of Ethics set by FASEA will come into force.

The Australian Government has recently announced that rather than financial advisers being required to join a code monitoring body, it will accelerate the establishment of a new disciplinary system and single disciplinary body for financial advisers as recommended by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

AFS licensees will be required to take reasonable steps to ensure their representatives comply with the code, with ASIC able to act against licensees that fail to adhere to it.

FASEA also recently released additional guidance in FG002 Financial Planners and Advisers Code of Ethics 2019 Guidance.

Regulatory burden and impact of complex regulatory frameworks

CPA Australia understands that the new requirements being implemented by FASEA are having an impact on professional accountants providing financial planning advice, including duplicating CPD and ethical obligations. We also understand through our recent research that because of cost and complexity in the financial planning sector, many are considering if they should continue to provide financial planning advice in their practice.

Importantly, however, the research revealed an increasing demand from both consumers and small businesses for financial planning advice.

CPA Australia is committed to collaboration with the broader accounting profession, presenting a united front to advocate reform to government and to support all practitioners in their pursuit of best practice in the provision of financial planning advice and services that are so strongly valued by clients.