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Explainer: The new adviser experience pathway

In September 2023, the government passed amendments to financial adviser education standards and removed the requirement for advisers with more than 10 years’ industry experience and a clean disciplinary record to complete an approved qualification.1 Previously, financial advisers were required to complete a Financial Adviser Standards and Ethics Authority approved degree by 2026 to continue working on the sector.1 As a result of practical implementation issues, during the 2022 election, the government promised to address concerns about the education requirements for existing advisers and better recognise industry experience.2

Below, we unpack the details of the new experience pathway and how we think the industry has responded to its introduction.

What does the new legislation involve?

In recognition of financial advisers with more than 10 years’ industry experience providing advice between 1 January 2007 and 31 December 2021, the government has removed the requirement for experienced advisers to complete an approved qualification. To access the experienced pathway, advisers are also required to have a clean disciplinary record with no bannings, disqualifications or enforceable undertakings during their career.2

Experienced advisers will still be required to comply with other industry standards, including passing the adviser exam and continuing professional development requirements.3

Previously, non degree-qualified advisers were required to complete up to eight units of tertiary study to remain in the industry under the original education standards introduced in 2019.4

The amendments also allow for advisers who have previously left the industry to re-enter without having to hold a degree – as long as they have enough cumulative industry experience between 2007-2021.5

Introducing the laws to Parliament, Assistant Treasurer and Minister for Financial Services, The Hon Stephen Jones MP said they would provide a pathway for experienced advisers to stay in the industry.

“This means new entrants have the benefit of their experience through mentoring, supervision and employment. It also means that more Australians will have access to financial advice than would otherwise be the case,” Mr Jones said.6

The laws also allow the government to use a level of discretion around approving adviser degrees. Previously, only advisers holding one of a list of approved degrees were able to qualify as a ‘relevant provider’. If they did not hold one of these degrees, they would need to complete further tertiary study.7

Under the amendments, new entrants to the industry can apply directly to the relevant Minister to have their degree recognized, and education providers can confirm that a person has completed the requirements of an approved degree, even if it is not on the approved degree list.3

How has the industry responded?

The amendments have had a mixed response from the industry, with FAAA chief executive Sarah Abood saying the association was “disappointed” when the government confirmed earlier this year that there would be no sunset clause on the pathway.

Ms Abood pointed out this could allow younger advisers currently in their 30s to “practice indefinitely with no qualifications required”.8 An FAAA survey indicated members were divided on whether the pathway was a good thing, with 50.9% saying they were in support.9

What happens now?

Advisers who want to access the experience pathway will need to complete a self-declaration before 1 January 2026 - when the transition arrangements for the industry education standards end – and they or their licensee must lodge it with ASIC. If they have left the industry and want to return, they will need to pass the adviser exam.5

Mr Jones has said the new laws will hopefully stem the flow of advisers exiting the sector, but there will be further work to do on improving the education standards, which he has described as “nuts”.

“People don’t decide at the age of 18 that they want to become a financial adviser or when they are an undergraduate. It is people who have worked in a bank or as an accountant or who have studied a commerce degree and then decided they want to do advice,” Mr Jones said.

“There is a pathway to growing adviser [numbers] to 30,000 again, but we won’t get there in two years’ or five years’ time. We have to be pragmatic about it and have more doors at the university level, such as by recognising components of other degrees and ensuring there is a logical pathway.”10

This document is prepared by ClearView Life Assurance Limited (ABN 12 000 021 581, AFSL 227682) (ClearView) and is intended only for advisers. The information is general in nature, it does not take into account your objectives, financial situation or needs. Before determining whether to apply for or hold the product(s) you should read the Product Disclosure Statement (PDS) and consider the appropriateness of the product(s) to your circumstances. A copy of the PDS can be obtained from 132 977 or on our website www.clearview.com.au/pds. If relevant, information about the Target Market Determination(s) for this product(s) is available at www.clearview.com.au/tmd. ClearView ClearChoice is issued by ClearView Life Assurance Limited (ABN 12 000 021 581, AFSL 227682 and ClearView ClearChoice Super is issued by HTFS Nominees Limited Pty Limited (ABN 78 000 880 553, AFSL 232500, RSE Licence L0003216) as trustee of HUB24 Super Fund (ABN 60 910 190 523, RSE R1074659) (Trustee). ClearView ClearChoice Super Rollover is issued by the Trustee. Any representations regarding past performance are not indicators of future returns and/or performance. Premiums, regardless of premium type, are not guaranteed and may be increased or decreased in the future. Please refer to the ‘Premiums and Other Costs’ section of the relevant PDS for more information. ClearView does not make any representation as to the accuracy of any non-ClearView websites or articles referenced in this document and to the extent permitted by law does not accept any responsibility or liability for the content. This document is current as at 26 September 2023. ClearView can vary or withdraw this document at any time. You should always check with ClearView to confirm that this document is up to date.

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