Financial Advising Changes

1998 Kula World video game

Inspiring us beach balls to roll around collecting coins, fruit and keys navigating trippy backgrounds, gravity and time. Similar principles, but a lot easier and less at risk than financial advising.

There was a 41% increase in Financial Planners between April 2009 and August 2018 as recorded in the Background Paper 6 of the Royal Commission (1). The Corporations Amendment (Professional Standards of Financial Advisers) established the Financial Adviser Standards and Ethics Authority (FASEA) in April 2017, to set the education, training and ethical standards of licensed financial advisers in Australia (2). The Australian Financial Complaints Authority commenced operations in 2018 as an impartial and independent organisation offering an alternative to tribunals and courts to resolve complaints (3). And in 2019 the FASEA released the Financial Planners and Advisers Code of Ethics. The code stipulates that Financial Planners and Advisers must always act with the following values; trustworthiness, competence, honesty, fairness and diligence (4).

From the 1st of January 2019 Financial Planners and Advisers will be required to complete 40 hours of Continuing Professional Development per year, to ensure they maintain and extend their professional capabilities, knowledge and skills (5). It is also required that new Financial Planners and Advisers have an approved bachelor degree (AQF7 level) or above or equivalent (6). Existing Financial Planners and Advisers will require the same level of qualification by the 1st of January 2024, to quote John Maroney from the Australian Financial Review ‘this is a substantial increase from the existing diploma level requirement.’ (7) And the requirement of a regulatory guided internal dispute resolution process that meets the Australian Securities & Investments Commissions requirements must be in place by the 5th of October 2021 (8).

To quote the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry “the industry must move from an industry dedicated to the sale of financial products to a profession concerned with the provision of financial advice.”(9) This is what the recent legislative changes have been created to do and with ‘the number of people entering retirement growing and their life expectancy increasing, government support for retirees, pensions, health care and retirement accommodation will come under ever-greater pressure.’(10) With all of the changes, there are many people expecting the future profession of Financial Planning and Advising in Australia is sure to be an ethical, sought after and rewarding profession, we will see.

1 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, 2018. Some Features Of The Australian Financial Planning Industry Background Paper 6 (Part A). Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, p.7. Available at: <https://financialservices.royalcommission.gov.au/publications/Documents/features-of-the-australian-financial-planning-industry-paper-6.pdf>

2 Financial Adviser Standards and Ethics Authority Ltd. 2019. The Financial Adviser Standards And Ethics Authority | FASEA. [online] Available at: <https://www.fasea.gov.au/>

3 Afca.org.au. 2018. About AFCA | Australian Financial Complaints Authority (AFCA). [online] Available at: <https://www.afca.org.au/about-afca>

4 Financial Adviser Standards and Ethics Authority Ltd, 2019. Financial Planners And Advisers Code Of Ethics 2019. FASEA.

5 Financial Adviser Standards and Ethics Authority Ltd. 2019. Continuing Professional Development For Financial Advisers | FASEA. [online] Available at: <https://www.fasea.gov.au/continuing-professional-development/>

6 Asic.gov.au. 2020. Qualification, Exam And Professional Development | ASIC - Australian Securities And Investments Commission. [online] Available at: <https://asic.gov.au/for-finance-professionals/afs-licensees/professional-standards-for-financial-advisers/qualification-exam-and-professional-development/>

7 Maroney, J., 2019. What Your Financial Planner Should Look Like By 2024 As New Standards Kick In. [online] Australian Financial Review. Available at: <https://www.afr.com/wealth/superannuation/what-your-financial-planner-should-look-like-by-2024-20190131-h1aoiq>

8 Australian Securities & Investments Commission, 2020. RG 271 Internal Dispute Resolution. ASIC.

9 2019. Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. Final Report. [online] Available at: <https://treasury.gov.au/sites/default/files/2019-03/fsrc-volume1.pdf>  

10 Australian Securities & Investments Commission, 2011. National Financial Literacy Strategy. [online] ASIC. Available at: <https://download.asic.gov.au/media/1343576/rep229-national-financial-literacy-strategy.pdf>