The Financial Adviser Standards and Ethics Authority (FASEA) chief executive, Stephen Glenfield, said during Senate Estimates that advisers who did not pass the exam this year could sit the exam next year without being classified as a ‘new entrant’.
Upon further investigation, it seems that this was not so straightforward and that financial advisers should not rely on this as a ‘plan B’.
FASEA has said that if an existing adviser had a ‘ceased’ status on the Australian Securities and Investments Commission (ASIC) Financial Adviser Register (FAR) by the end of 2021, and then were to be re-authorised after 1 January, 2022, they could indeed sit the exam in 2022 without being classified as a ‘new entrant’.
However, if an existing adviser were authorised on the FAR, had not passed the exam by the end of this year, and wanted to practice in 2022, they would be classified as a new entrant and would need to meet the new entrant requirements including the professional year.
This alternate route could see advisers who had failed the last exam of November take a “career break” and technically be ‘ceased’ on the FAR, giving more time to pass the exam in 2022 without being classified as a ‘new entrant’.
While FASEA has offered this pathway as part of their FAQ on their website, they need to give advisers proper clarity of the pathway and not just technical work arounds. Without appropriate clarity, advisers are left questioning what will happen in their own situations and whether this is viable for them.
Financial advisers should heed the advice of Association of Financial Advisers (AFA) chief executive, Phil Anderson, who said advisers should do everything they can to pass the exam this year if they wanted to continue to advise clients in 2022.
During their time as a ‘ceased’ existing adviser, advisers cannot advise clients meaning their clients are left in limbo for at least the first half of the year unless advisers make alternative arrangements for clients.
Not only this, FASEA would hand over the reins of the exam’s administration, dates, costs and format to ASIC come 1 January, 2022, under draft legislation.
The gap between being ‘ceased’ and the ability to service clients is even more unclear as ASIC has not given guidance as to when the exam dates will be held next year nor details on its administration of the exam.
There is too much at stake and too many unknowns for advisers to lean on this potential pathway especially given FASEA has not provided the clarity they need to prolong not passing the exam if they wish to practice next year.