Existing advisers who are “ceased” and have not passed the Financial Adviser Standards and Ethics Authority (FASEA) exam by the end of 2021 but are re-authorised to provide financial advice after 1 January, 2022, will not be classified as a new entrant.
Last week, FASEA chief executive, Stephen Glenfield said existing advisers who had not passed would be able to sit the exam next year due to a section under the Corporations Act.
When Money Management asked FASEA to confirm whether existing advisers who were “ceased” on the Australian Securities and Investments Commission (ASIC) Financial Adviser Register (FAR) would have to become a new entrant, a spokesperson said: “If you are an existing adviser and ceased on the FAR as at 1 January, 2022, then you must pass the exam before you are eligible to be reauthorised to provide financial advice by your licensee”.
This suggested that advisers who failed the last exam in November could then take a “career break” and could sit the exam in 2022 without being classified as a new entrant.
If an existing adviser who was “ceased” on the FAR and was re-authorised to provide advice before 1 January, 2022, and had not passed the FASEA exam, they would be classified as a new entrant.
“For an existing adviser who has not passed the exam by 1 January, 2022, their licensee will be required to remove their authorisation to provide advice and notify ASIC that they have not met the examination requirements of the Corporations Act,” FASEA said.
“Their status on ASIC’s Financial Adviser Register will be updated to reflect that they are no longer authorised and therefore “ceased”.
“If they want to return to practice, they would be classified as a new entrant and would need to meet the new entrant requirements.”
Commenting, Association of Financial Advisers (AFA) chief executive, Phil Anderson said while this appeared to be an alternative for advisers who did not think they could pass the exam this year, there was a lack of certainty of when the exam would run in 2022.
“It appears there is an option for advisers that are on a career break as at 1 January, 2022, and this may be relevant in certain circumstances, however for the vast bulk of advisers we would encourage them to do everything they can to pass the exam before the end of 2021,” Anderson said.
“Next year the exam will pass from FASEA to ASIC to administer and I would still encourage advisers not to place a great deal of reliance on that pathway and instead focus on passing the exam this year to give the confidence to continue to operate in the new year.
“Plus If you don’t pass by the end of this year you can’t service clients in early part of next year and you would have to make an alternative arrangement for that gap and otherwise your ongoing fee arrangements would necessarily need to terminate.”