The new independent standards body aimed at governing the financial advice industry will be set up as a part of the professional standards legislation, which is expected to be introduced to the Parliament by the Government this year to mandate standards for financial advisers, Minister for Revenues and Financial Services, Kelly O'Dwyer, announced.
The cost of establishing the new body, as a Commonwealth company, would be covered by the large banks and AMP while the chairman and directors would be appointed by the minister.
Additionally, the Government announced that once the body was fully operational, it would develop an ongoing industry funding model for the body.
The main responsibilities would include developing and setting the industry exam, developing the code of ethics, and determining the education and development requirements for both new and existing advisers.
"This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector," O'Dwyer said.
"The Government will introduce its legislation on the reform package into the Parliament following final consultations with industry and consumer group later this month."
The Financial Planning Association (FPA) welcomed the announcement and said it would continue to work closely with Government to ensure that the reforms met the needs of consumers.
The FPA head of policy and government relations, Benjamin Marshan, said: "The establishment of an independent standards board is positive, as its sole focus will be to raise overall minimum standards, which will in turn rebuild consumer trust and confidence in the financial advice profession".
The new professional standards regime, a reforms package aimed at improving standards for financial advisers, was first announced in April and would commence in January, 2019.
Existing advisers will have time until January, 2021 to pass the new exam and until January, 2024, to reach degree-equivalent status.
The reforms included:
- 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 will represent a common benchmark across the industry; and
- An ongoing professional development component.