The Minister for Revenue and Financial Services has announced that the Government will introduce legislation into the Parliament this year to establish the legal framework for minimum professional standards for financial advisers. The changes will include:
- Compulsory education requirements for both new and existing financial advisers;
- Supervision requirements for new advisers;
- A code of ethics for the industry;
- An exam that will represent a common benchmark across the industry; and
- An ongoing professional development component.
UPDATE 9 February 2017: the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016 has passed both Houses.
The new professional standards regime will commence on 1 January 2019. Existing advisers will have until 1 January 2021 to pass the new exam and until 1 January 2024 to reach degree-equivalent status. More details.
The professional standards legislation will also establish an independent standards body, as a Commonwealth company, to govern the professional standing of the financial advice industry.
The cost of establishing the body will be met exclusively by the large banks and AMP.
Once the standards body is operational, the Government will take steps to develop an ongoing industry funding model for the body.
The body will be responsible for developing and setting the industry exam, developing the code of ethics, and determining the education and development requirements for both new and existing advisers.
A single, uniform code of ethics will set the ethical principles for advisers.
Professional associations and other independent third party monitoring bodies will develop compliance schemes to monitor and enforce advisers’ adherence to the Code. Non-compliant advisers will be subject to disciplinary action and sanction by the monitoring bodies.