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Education and professional standards for financial advisers

What are the new professional standards?

The introduction of a range of education and ethical standards will require new and existing advisers giving financial advice on Tier 1 financial products (excludes general insurance, deposit products and personal sickness and accident) to retail clients to meet new requirements, including:

  • Compulsory education requirements for both new and existing 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.

Importantly, the standards relate to Tier 1 financial product personal advice. Tier 2 financial products and those giving general advice only on Tier 1 products are not covered by the new standards.

 

Who is FASEA?

The Financial Adviser Standards and Ethics Authority (FASEA) has been tasked with governing the conduct of professionals in the financial advice sector by establishing mandatory educational and training requirements, developing and setting an industry exam, as well as the formation of a code of ethics that all advisers will be required to adhere to.

What are the education requirements?

FASEA announced that from 1 January 2019, new entrants into the financial adviser occupation will require an Australian Qualifications Framework (AQF) Level 7, FASEA-approved qualification, equivalent to a bachelor degree. For existing advisers, the transition arrangements have been proposed by FASEA but are yet to be confirmed. The proposed requirement for existing advisers is an AQF Level 7, FASEA-approved qualification; an AQF Level 8, eight-unit, FASEA-approved qualification (typically this is a Graduate Diploma); or a FASEA-approved bridging course. Consultation on the FASEA proposal will commence in early 2018 until 29 June 2018.

 

Who is an existing adviser?

An existing adviser is a person who provides personal advice to retail clients at any time between 1 January 2016 and 1 January 2019; and is not banned, disqualified or suspended. Generally speaking, an existing adviser will be any individual listed on ASIC’s Financial Adviser Register as ‘current’ prior to 31 December 2018.

 

What is an AQF level?

The Australian Qualifications Framework (AQF) specifies the standards for educational qualifications in Australia. It’s administered by the government and ranges from vocational education to higher education. There are 10 levels of AQF, commonly known as degrees, diplomas and certificates.

AQF ensures national recognition and consistency as well as a common understanding of what defines each qualification.

 

What do the AQF levels mean?

Each of the 10 levels are defined by a set of learning outcomes that should be attained by a graduate of a qualification at that level. Similar to a university, Kaplan Professional is a registered higher education provider regulated by the Tertiary Education Quality and Standards Agency (TEQSA), and able to offer AQF qualification Level 4-10, as well as short courses addressing specific training needs that don’t result in an AQF qualification.

 

AQF LevelGraduate outcomesQualificationsKaplan Professional QualificationsApplicability to the financial services industry
Level 10Systematic and critical understanding of a complex field of learning and specialised research skills for the advancement of learning and/or for professional practice.Doctoral degree
Level 9Specialised knowledge and skills for research, and/or professional practice.Masters degree
Master of Financial Planning
Approved higher education qualification adopted by FASEA for authorisation
Level 8Advanced knowledge and skills for professional/highly skilled work.Graduate Diploma

Graduate Certificate

Bachelor honours degree
Graduate Diploma of Financial Planning

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Graduate Certificate of Financial Planning
FASEA proposed existing adviser requirement by 1/1/2024
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Level 7Broad and coherent knowledge and skills for professional work.Bachelor degreeNew entrant requirement for financial advisers from 1/1/2019
Level 6Broad knowledge and skills for paraprofessional/highly skilled.Advanced diploma

Associate degree
Advanced Diploma of Financial Planning – Kaplan Financial Planner Level 2
Level 5Specialised knowledge and skills for skilled/paraprofessional work.DiplomaDiploma of Financial Planning – Kaplan Financial Planner Level 1Current minimum requirement for financial advisers
Level 4Theoretical and practical knowledge and skills for specialised and/or skilled work.Certificate IV

How does the current education requirement, RG 146, apply during the transition?

The current education requirement, RG 146, will continue to apply to existing advisers until the new requirements apply. This means existing providers must pass the exam by 1 January 2021 and meet the new education requirements by 1 January 2024.

The current education requirement, RG 146, will continue apply for new entrants to the industry seeking to become a financial adviser before 1 January 2019. After 1 January 2019, new entrants will require an AQF level 7, FASEA-approved qualification, equivalent to a bachelor degree.

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