FAR loophole found to help advisers dodge PY redo

As the deadline approaches for advisers to meet higher education requirements, the FAAA has shared an alternative pathway to help advisers avoid redoing a professional year (PY).

In 2016, the Corporations Amendment (Professional Standards of Financial Advisers) Bill was introduced to Parliament, leading to higher minimum education and training standards for financial advisers.

Passing through Parliament in 2017, financial advisers were given a  1 January 2024 deadline to meet the new minimum education requirements, though this was later pushed back to 1 January 2026.

Once the deadline hits, if there are any individuals remaining on the Financial Advisers Register (FAR) who are yet to meet the outlined requirements, they will be forced to undertake a PY, regardless of their level of education or experience.

Notably, 2023 saw the experience pathway for advisers pass through Parliament, allowing those who had been an authorised financial advisers for a minimum of 10 years’ cumulative between 1 January 2007 and 31 December 2021, as well as a clean disciplinary record as at 31 December 2021, to be exempted from the new education requirements.

With just over four months left until the education deadline, ASIC’s latest estimate suggested that, of the 15,610 relevant providers registered on the FAR as at 28 May, only 11,006 had notified the regulator that they would be relying on the experience pathway or had met the education requirements.

Of the remaining 4,604 relevant providers, ASIC speculated that some 1,844 may be eligible for the experience pathway but have yet to notify ASIC, leaving some 2,760 yet to fulfil the requirements to continue providing advice from 1 January 2026.

Talking to the latter cohort, Sarah Abood, chief executive of the Financial Advice Association Australia (FAAA) said on a webinar last week that there is an alternative pathway they should consider.

“If you’re in a position where you don’t meet either of those requirements, and maybe you’ve got a unit or two to complete and you’ve run out of time, there is a pathway there where you leave the FAR before 31 December 2025, you complete whatever it is that you need to complete, maybe it’s a singular unit or a couple of units, then you can rejoin the register post 1 January 2026.”

By doing this, advisers can avoid the need to redo the PY which will be required of those who are still on the register at the time of the deadline and who have not met either the education or experience requirements.

“That’s a fairly obscure kind of pathway that we hadn’t been aware of. We’ve been digging into this and confirming that that is, in fact, the case with ASIC. So if you’ve thought, ‘I can’t possibly finish all this by 31 December, I’m going to have to leave,’ there may be an opportunity for you to take a couple of months out, finish it off and then rejoin, so that’s important for all of our members to be aware of, and we’re taking every opportunity to talk about that.”

With around 1,000 advisers expected to exit the industry at the end of 2025, Abood explained the importance of making sure advisers are aware of this option as the profession continues to struggle under overwhelming demand and insufficient advisers available to deliver.

Speaking on a subsequent FAAA webinar, Phil Anderson, general manager of policy, advocacy and standards, warned advisers looking to utilise this option will need to act fast. 

This is primarily due to the fact that, in order to be removed from the FAR, advisers need to communicate this through to their licensee who then will pass this onto ASIC, which could take time.