Money Management examines how the experienced provider pathway has impacted the advice industry one year on.
Just over one year ago, the experience pathway was passed in Parliament on 6 September 2023.
The pathway provides a way for those with a decade of experience or more to continue advising without the need to hold an approved degree.
Specifically, it allows financial advisers with at least 10 years of experience between 2007 and 2021 to meet qualification standards without further education. They must also have a clean disciplinary record as of 31 December 2021.
To be eligible to access the pathway, an adviser should also have passed the financial adviser exam by 1 January 2022, or 1 October 2022 if they were eligible for the exam extension.
At the time of its passage, Minister for Financial Services, Stephen Jones, said: “This will help to address the mess left by the last government which oversaw an industry that lost over 10,000 financial advisers since 2019.
“By better recognising the experience of long‑serving financial advisers, the government is providing a pathway for experienced advisers to remain in the industry. This means that new entrants will have the benefit of their experience through mentoring and supervision, and more Australians will have access to financial advice.”
Some 12 months later, Money Management examines how the advice industry has reacted to, welcomed, and criticised the pathway’s implementation.
September 2023
In response to the bill’s passage, Judith Fox, chief executive of the Stockbrokers and Investment Advisers Association, told Money Management that it was an “outbreak of common sense”.
Sarah Abood, chief executive of the Financial Advice Association of Australia (FAAA), said at the time: “It is good that the experience pathway issue has been resolved. It has been subject to debate since late 2021, leaving many advisers unsure of their future in the profession. We welcome the recognition of the experience of long-serving financial advisers.”
May 2024
Over six months after the experience pathway’s passage, ASIC issued guidance for licensees on how they could access it. Advisers need to make a written declaration and give a copy to their authorising Australian Financial Services Licensee (AFSL), the regulator stated in May this year.
“Existing providers who seek to rely on the pathway need to make a declaration and provide it to their licensee before 1 January 2026 so they can continue to provide personal advice from that date,” the regulator explained.
June 2024
Compliance experts also warned there is potential for the experience pathway to be abused if licensees fail to check whether an individual has the necessary 10 years’ experience, with former employed advisers to face the greatest challenge.
Speaking at a Holley Nethercote compliance session, partner Sam Hills noted there is no requirement for licensees to check that the individual does indeed have 10 years of experience on the Financial Advisers Register (FAR). Nor is there a requirement for ASIC to check whether the adviser has been on the register for 10 years.
“You would hope there aren’t unethical people, but if there is, then they could absolutely put their hand up and pretend,” she said in June.
“There’s a risk an adviser could lie and be misleading and that would be a breach of the law and a licensee has an obligation to take reasonable steps to comply with the financial services law.”
In the same month, ASIC issued a reminder to AFSLs that new experience pathway obligations came into force on 1 July. This required licensees to notify the regulator by lodging a notice where they have received a written declaration from a financial adviser who is eligible to access the experienced provider pathway.
July 2024
In July this year, the regulator then called on licensees to assess the accuracy of records about their financial advisers on the FAR after it identified several errors and inconsistencies.
Moreover, industry experts recognised that the FAR will not distinguish between whether an adviser is qualified through further education or through the experience pathway, and assessed how this will affect consumers and employers.
Anne Palmer, general manager of education and professionalism at the FAAA, believes it is a positive move for consumers accessing advice, but warned employers to continue doing their due diligence.
“From a client’s point of view, at the end of the day, all they want to know is whether that adviser is registered and legally able and qualified to provide advice. I doubt consumers will be going onto the FAR and looking at their specific qualifications,” she explained.
From 1 August, ASIC also commenced a compliance program to ensure that the information recorded on the FAR about approved qualifications is correct and will consider enforcement action where necessary.
