The Federal Government has introduced legislation into Parliament today to mandate professional standards for financial advisers.
The Minister for Revenue and Financial Services, Kelly O'Dwyer, introduced the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016, following concerns raised by the Financial System Inquiry (FSI) and the Parliamentary Joint Committee on whether guidance set by the corporate regulator on the minimum knowledge, and education standards required for financial advisers were sufficient.
"The current requirements have allowed some financial advisers to become qualified to provide financial advice to retail consumers after only four days of training," O'Dwyer said.
"There is also no specific requirement currently for advisers to undertake continuous professional development," she said, adding advisers would need to be qualified to a standard equivalent to a degree.
The Bill includes 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 would represent a uniform benchmark across the industry, and ongoing professional development.
The new professional standards regime would start on 1 January, 2019, where new advisers entering the industry would need a relevant degree. Existing advisers would have until 1 January, 2021, to pass the exam, and five years until 1 January, 2024, to meet the educational requirements.
"The transition period recognises that existing advisers may need to complete the education requirements on a part-time basis, while continuing to service their existing clients," O'Dwyer said.
The government would also establish an independent standards body as a Commonwealth company to oversee the regime. From the date of establishment until the regime begins on 1 January, 2019, the body would be responsible for developing and setting the industry exam, developing the code of ethics, and setting the education requirements, including working with education providers to set suitable courses.
These would be developed according to international best practice, with the body consulting broadly with stakeholders throughout the process. The body would be funded initially and on an ongoing basis, by the industry.