Financial advisers are gearing up for the commencement of the new education and professional standards regime on 1 January, with the Turnbull government announcing that it will soon introduce legislation into the Parliament to mandate professional standards for financial advisers.
The reforms will include:
- 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
The professional standards legislation will also establish an independent standards body, as a Commonwealth company, to govern the professional standing of the financial advice industry, with the Chairman and directors appointed by the Minister.
The cost of establishing the body will be met exclusively by the large banks and AMP.
“This independent standards body will raise minimum standards in the financial advice industry and improve public confidence in the sector,” said Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP when announcing the decision.
Both the Financial Planning Association (FPA) and the SMSF Association endorsed the Federal Government’s decision to legislate to improve the professional standards of financial advisors.
SMSF Association Head of Policy Jordan George says improving the educational and ethical standards of financial advisors has been a long-term policy of the organisation, especially as it relates to the $622 billion self-managed super fund (SMSF) sector.
“Having financial advisors who meet rigorous standards and have completed relevant education courses is crucial to ensuring consumers receive the best quality financial advice,” he said.
Ben Marshan CFP , FPA Head of Policy and Government Relations, said the FPA is pleased to see the legislation continuing to move forward.
“The FPA has been advocating for higher minimum education, training and ethical standards in financial planning for many years. The reforms will provide financial planners with clarity and an appropriate transition time to adjust to the new professional landscape,” said Mr Marshan.
“This new regime is a comprehensive package that includes long awaited enshrinement of the term financial planner/adviser, education requirements for both new and existing financial planners, an industrywide code of ethics and ongoing CPD. Many of these elements are already requirements for FPA membership.”