Pathway for advisers to avoid being classified as 'new entrant'

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”.

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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.”

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OK, now I'm really confused. Unless I'm mistaken, we've been told all along that FASEA sits above the Corporations Act with its Standards. So Glenfield now says that's not the case. It'll make the first legal challenge interesting. I guess the way around FASEA now is to deregister on the FAR, hope your business or employer is happy to take the hit of you not advising, and then sit the exam at your leisure. What a mess.

An existing financial adviser (existing provider) is a person who:

was listed on the Financial Advisers Register as being authorised to give personal advice (as an AFS licensee or on behalf of an AFS licensee) between 1 January 2016 and 1 January 2019 (either as ‘Current appointment(s)’ or ‘Previous appointment(s)'), and on 1 January 2019 was not banned, disqualified or subject to an enforceable undertaking.

Existing advisers are people authorized between 16-19. For example my wife might be not working now and choose to do the exam next year. She can pass the exam after 2022 and become an AR again but they must passed the education requirements before 2026 like everyone else and also have to complete catch up CPD... Is my understanding.

Thanks WOW.

If FASEA had a shred of decency, they would release a joint public statement with ASIC which clearly outlines this pathway, to give certainty to those who must be in a world of pain right now, worried about their careers and/or businesses; rather than using this apparent newly discivered loophole to deflect criticism.

Great suggestion "George". The industry can't reply on heresay in a Senate Estimates presentation. It needs to come out via an ASIC Media Release, given ASIC will be responsible for the exam in 2022 onwards.

I find it hard to believe that anyone who truly intends passing the exam would be unable to do so by the end of the year. Even if it takes a few attempts. They have had since June 2019. That's plenty of time in spite of the many interruptions and challenges. Most of those angling for extensions and loopholes have no intention of ever sitting the exam. They're just trying to push back their inevitable exit.

People are on maternity leave or taking a break to raise children so obviously they cannot sit an exam but otherwise, are fully licenced and educated financial advisers.

The fly in the ointment with all this is the ridiculous time ( 3 months ) before being able to take the exam again
If that changed I am sure many of us would feel more confident and less stressed wondering at the position we would be in come 2022

hi irene,

that's just a small issue. let me ask you how many times should one be allowed to have a crack? 1, 2, or 3, I'd say 3. if you can't pass it in 3 times then maybe you ought to be doing something else.

the bigger and more important question that many of the smart ones have already answered (by leaving) is that the industry is just not sustainable anymore. that's the bigger question. not the fasea exam and education requirement.

I don’t know why we are doing it in the first place !?
There is a master plan behind all this and whatever it is the main purpose i think ! is to “ cull” the adviser force and make way for cheaper alternatives for the insurance companies
BID my foot ! there is a lot more to this then meets the eye!
Wait and see this is far from over ,
Not getting exam results other than a pass or fail leaves the “rumour” mill way open for theorists to make outlandish statements of corruption at the highest level. How can you resist something if you don’t know where you went wrong the first time ?
I fail to see how this makes me a better adviser ? I sit one exam with FASEA and I am now ok to continue with something I have been successfully doing for 43 years ?

Spot on Irene, I felt no different after the exam than I did the 30+ years previously. If the Canberra scandals have shown us anything, you can't teach ethics or empathy.

It was part of a deal done between the CBA and the FPA, according to a well known journalist. Your called the scapegoat. Sleep tight knowing those CBA CEO's and the Banks avoided an enquiry for a couple of years, and the FPA and AFA got compulsory membership. Personally I would prepare yourself for an annual exam.

No one is proposing an annual exam Yogi. Cut the crap please. Financial advisers are already stressed enough without reading that sort of BS.

judging by many of his comments, I think (the) yogi is just highly experienced and has been around for a long time to know that an annual exam could become reality. you just don't know. and if it is not from the regulators it could be from the dealer groups.

how many people who have been around for a long time remember having to do an annual exam from the dealer group?

yes sir. I am going to start sending my toilet schedule to my dealer group compliance so they can monitor and supervise me more effectively.

Irene, Bill Kelty and others were very clear on the aims of Super - control the capital and control almost everything without the need for being in Government.
If you read the submissions from Treasury in the RC, you would be left in no doubt that some in Treasury appear to be very devoted to this task - and hate Financial Planners.
Why have Financial planner been targeted so consistently for so long ()and for things that Industry Super does in the full light of day today with Government backing and legislative support)? Financial planners were or are about the only people in the country who could move money away from Industry Super.
Why were we so poorly treated at the RC? To answer that you need to ask yourself,
1) how much FUM moved to Industry Super since 2018?
2) How much of Industry Super's competition has exited the room since 2018?
3) How many clients have Financial Planners stopped servicing since 2018?
4) How many Financial Planner will remain - we know it will be less.
5) Why does Daniel Press not know why advise is so expensive? So ASIC can have a review of the situation and introduce more scope for Industry Super to deliver more advice to all these client who no longer have an adviser.

I still remember the argument around "conflicts" being introduced and the example of a client with a mortgage and an adviser having a conflict to sell product even though it might be better to repay the mortgage. Conflicts has been a great win for eliminating real Financial Planner - but Industry Super and Intra Fund Advise could not care less if their members have a mortgage - that is why they are allowed to help with making additional contributions - no conflict?
Now the Liberals are trying to tackle proxy voting, super return tables etc but the horse has bolted.
The War of Retail and Industry Super has been held and won. Industry Super will be allowed to continue on selling product, charging all members for a service they might never use, producing returns above all others for decades on decades with no questions asked. All good when the cashflow is in.
Just get qualified, and provide real good advise to a few. Don't worry about the masses - leave them to Industry Super I guess.
All under Liberal Governments - go figure.

This is just a laughable situation. At the eleventh hour they decide to let everyone in on a little secret that you can get around the exam deadline by going on a 'career break', provided you do this before the deadline you then have as long as you like to knock off the exam. There's people out there taking their own lives over the stress and pressure of the education and exam requirements. defies belief.

but doesn't that tell you the contempt we are held in that 24 people have died by suicide? there is empirical evidence now that shows that financial planners are more stressed than any other profession and there is no one who thinks that our and our families' mental health and well-being of any importance whatsoever, yet when covid happened we were the first responders to help people through.

this is morally wrong, incomprehensible, and totally unacceptable. what other occupation group suffers so much persecution.

This entire process needs its own Royal Commission. Maybe run by someone who's actually competent.

This Federal Govt is inept. They couldn't run a piss up in brewery

There's only a small portion of advisers left...and FASEA will be comfortable with a certain failure rate...Just remember this will be an annual exercise within the next Political cycle, so get used to it.. After all lot's of other industries have annual examinations and Planners still have zero conflict free representation. So you tell me what's changed to prevent the next inevitable financial failure blaming "individuals" planners.

the situation is pretty hopeless and financial planners have no other alternatives but to leave.

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