How can advisers utilise proposed experience pathway?

Advisers seeking to rely on the experience pathway have received further clarification from the Treasury after it released proposals for consultation.

There were thousands of advisers who still lacked the relevant qualification or approved degree, as they had been expecting to rely on the experience pathway, as proposed by Labor last year. Research by Wealth Data found over a third of advisers who had commenced prior to 1 January 2009 still lacked a degree.

However, advisers had been left wondering in the intervening months since the announcement what would become of the proposals and when they would be enacted, if at all.

The Treasury had now released a consultation outlining what would deem an adviser eligible for the pathway.

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Under the proposals, experienced financial advisers who had completed a minimum of 10 years of full-time equivalent experience and have a clean disciplinary record were not required to complete an approved degree or one or more courses, determined by the Minister. They were still required to pass the financial adviser exam and comply with continuing professional development (CPD) requirements.

“These new transitional arrangements provide that financial advisers who meet the criteria for an ‘experienced provider’ are not required to undertake further study to meet the qualifications standard. If an individual does not meet the criteria for an ‘experienced provider’, they will need to undertake further study, as required under the existing transitional arrangements, to meet the qualifications standard by 1 January 2026.”

In a statement, Minister for Financial Services, Stephen Jones, said: “Since 2019, over 10,000 financial advisers have left the industry in response to new standards. Many were unsuited to the requirements of the new industry, which include professional qualification. However, this has pushed some experienced advisers with no history of misconduct out of the industry, reducing access to advice.

“As a transition measure, the government will fulfil its election commitment to better recognise the experience of long‑serving advisers.

“Feedback has also highlighted that some individuals currently fail to meet the education standards for purely technical reasons, despite completing the substance of an approved degree.

“The legislation would address this by increasing the flexibility of the degree approval process, by allowing domestic qualification applications to the Minister and the ability for education providers to confirm that a person has completed the requirements in an approved degree.”

What do advisers/AFSLs need to do?
If an experienced adviser wished to rely on the new transitional arrangements for experienced providers, the adviser needed to make a self-declaration confirming that they had met all the criteria to be an experienced provider. If they were an authorised representative (AR) of an Australian financial services licensee (AFSL), they needed to provide self-declaration to their licensee.

A notice then needed to be lodged with the Australian Securities and Investments Commission (ASIC) within 30 business days of the financial adviser becoming a relevant provider (for example, if someone was not a current relevant provider) or within 30 business days after 1 January 2026 for existing relevant providers.

The notice needed to include identifying details of the relevant provider and a written statement to the effect that the person has met the education and training standard because they were an experienced provider.

The written statement is to be provided by:
• The financial adviser, if they were an Australian financial services licensee; or
• The AFSL who authorised that financial adviser as their representative.

Treasury noted AFSLs were held accountable for authorising an “experienced provider” to provide financial advice as a representative of that licensee and the individual financial adviser was accountable for making a claim that they met the “experienced provider” criteria.

Criminal and/or civil penalties may be applied if either or both the financial adviser and licensee give false or misleading information.

New entrants
There were also changes for new entrants, where the Minister could approve one or more ways of satisfying the conditions for an approved qualification. This would provide greater flexibility to new entrants, recognising that there may be different study pathways available to satisfy the education and training standard, Treasury said.

This would replace the previous need for new entrants to complete an approved qualification, including meeting all of the conditions for that approved qualification.

Treasury said: “This flexibility enables the Minister to determine alternative ways for a potential new entrant to demonstrate that they have substantively met the conditions for an approved qualification, where this is not evident from that person’s course transcript.

“For example, the Minister may determine that a person may satisfy condition(s) by providing written confirmation from their course provider that they have substantively met the conditions for the specified approved qualification.”

Financial advisers who were also registered tax agents would not be required to meet the additional education requirements to be a qualified tax relevant provider.

The submission period for consultation would close on 3 May 2023.