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 have announced that from 1 January 2019, the maximum requirement for a new entrant is an approved bachelor’s degree (AQF7) comprising of 24 subjects. The minimum requirement for a new entrant is an approved graduate diploma (AQF8) comprising of eight subjects, which is particularly relevant for career changers.

For existing advisers, the maximum requirement is an approved graduate diploma (AQF8) comprising of eight subjects by 1 January 2026^. The minimum requirement for an existing adviser is one bridging course – The FASEA Code of Ethics and Code Monitoring Bodies. Depending on their previous formal education or coursework for industry designations, existing advisers may be required to complete anywhere between one or eight subjects at AQF8. The three bridging courses are:

Categories of advisers

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.

 

Who is a career changer?

A career changer is a new entrant after 31 December 2018 with experience from their career in various industries. Career changers will need to complete an AQF level 8 qualification approved by FASEA.

 

Who is a new entrant?

A new entrant is a financial adviser listed on the Financial Adviser Register after 31 December 2018. New entrants will be required to complete a FASEA-approved qualification at AQF Level 7.

About Australian Qualifications Framework (AQF) level

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.

 

Click here to download the table >

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 by FASEA*
Level 8Advanced knowledge and skills for professional/highly skilled work.Graduate DiplomaGraduate Diploma of Financial Planning
FASEA approved
FASEA’s maximum education requirement for existing advisers to be met by 1/1/2026^
Graduate CertificateGraduate Certificate in Financial Planning
No AQF outcome will apply to the bridging courses Bridging course (3 units)FPC001B Economic and Legal Context for Financial Planning
Aligns to FASEA bridging course: Financial Advice Regulatory & Legal Obligations

FPC002B Ethics and Professionalism in Financial Advice
Aligns to FASEA bridging course: Ethics for Professional Advisers

FPC007B Client Engagement Skills
Aligns to FASEA bridging course: Client and Consumer Behaviour, Engagement and Decision Making
FASEA’s minimum education requirement for existing advisers to be met by 1/1/2026^
No AQF outcome will apply to the bridging courses Bridging course (1 unit) FPC002B Ethics and Professionalism in Financial Advice
Aligns to FASEA bridging course: Ethics for Professional Advisers
FASEA’s minimum education requirement for existing advisers to be met by 1/1/2026^
Bachelor honours degree
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
FNS60415 Advanced Diploma of Financial Planning
Level 5Specialised knowledge and skills for skilled/paraprofessional work.DiplomaFNS50615 Diploma of Financial PlanningPrevious minimum education requirement for financial advisers prior to 2019
Level 4Theoretical and practical knowledge and skills for specialised and/or skilled work.Certificate IV

*Depending on version completed. May require additional FASEA Code of Ethics subject.

^ The above deadlines are proposed by the government and have not yet been legislated. The government has indicated its intent to legislate these deadlines in the near future. The current legislated deadlines are as follows: New and existing advisers must pass the Financial Adviser Examination by 1 January 2021 and existing advisers must meet new education requirements by 1 January 2024.

What are FASEA’s CPD requirements?

FASEA’s mandated CPD requirements came into effect on 1 January 2019.

Financial advisers are required to complete 40 hours of ‘qualifying CPD activities’ in each CPD year with a minimum requirement in the following areas:

  • Technical Competence – 5 hours
  • Client Care and Practice – 5 hours
  • Regulatory Compliance and Consumer Protection – 5 hours
  • Professionalism and Ethics – 9 hours
  • General – no set minimum

Kaplan Professional is the leading provider in the provision of industry CPD. Our flagship online platform Ontrack provides organisations and individuals with the content, tracking, reporting and consultancy they need to manage and meet their CPD obligations.

FASEA Financial Adviser Examination

The FASEA Financial Adviser Examination is a fundamental component of the education standards all financial advisers must pass to provide personal financial advice to clients.

Existing advisers must pass the exam before 1 January 2022^. From 1 January 2019, new entrants to the industry must pass the exam after they’ve completed a FASEA-approved degree, and before commencing quarter 3 in their professional year.

The exam will test the practical application of advisers’ knowledge in the following competency areas:

  • Financial Advice Regulatory and Legal Requirements
  • Financial Advice Construction
  • Applied Ethical and Professional Reasoning and Communication

The duration of the exam is 3.5 hours (including 15 minutes’ reading time) and consists of multiple-choice and written-response questions.

 

*Depending on version completed. May require additional FASEA Code of Ethics subject.

^ The above deadlines are proposed by the government and have not yet been legislated. The government has indicated its intent to legislate these deadlines in the near future. The current legislated deadlines are as follows: New and existing advisers must pass the Financial Adviser Examination by 1 January 2021 and existing advisers must meet new education requirements by 1 January 2024.

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How does RG 146, apply during the transition?

RG 146 may continue to apply to existing advisers until the new professional standards apply to them. Existing advisers should confirm these requirements with their licensee.