Ethics course ‘inconsistency’ needs to be fixed before deadline: AIOFP

With the 1 January 2026 deadline for relevant providers to meet the qualifications standard rapidly approaching, fears are mounting that it could see a considerable exodus of advisers.

In a letter to Financial Services Minister Daniel Mulino, seen by ifa, the Association of Independently Owned Financial Professionals (AIOFP) has warned of an “inconsistency in the requirements for current professional financial advisers to complete a formal and accredited course of study in ethics”.

Earlier this month, the Australian Securities and Investments Commission (ASIC) released the results of a second spot check of the Financial Advisers Register (FAR) that found thousands of advisers don’t meet the requirements to remain registered after 1 January.

It discovered AFS licensees have notified ASIC that 6,426 relevant providers of the total 15,610 registered on the FAR hold an approved degree or qualification, as of 28 May 2025. Meanwhile, an additional 4,580 are relying on the experienced provider pathway.

This leaves a remaining total of 4,604 relevant providers who are yet to meet the qualifications standard, the regulator highlighted. Of this cohort, 1,844 may be eligible for the experienced provider pathway, but their AFS licensees are yet to notify ASIC of that information.

Lionel Rodrigues, chair of the AIOFP technical committee, said the inconsistency arises “because a suitably experienced adviser, who has availed themselves of the EPP is not required to complete a formal course of study in ethics”.

“Under Treasury Laws Amendment (2023 Measures No.3) Act, passing on 20 September 2023, the emphasis was on experience and having no disciplinary action recorded against that adviser on the Financial Adviser Register (FAR),” Rodrigues said.

“There was a requirement to complete the national exam, however, the requirement to undertake a formal course of study in ethics was specifically excluded by the minister.

“This contrasts with an adviser who, whilst not progressing through the EPP, and having met all of the other formal qualifying education requirements, must still successfully complete an accredited ethics course of study.”

He also noted that financial advisers have been subject to requirements on formal continuing professional development (CPD) and a national exam since 2017, along with the statutory and enforceable Code of Ethics since 2019.

“I respectfully alert the minister to the fact that since 2017, financial advisers have been required to meet statutory educational and ethical standards,” Rodrigues said.

“This situation pre-dated the legislated innovations of the 2023 Experienced Provider Pathway. Furthermore, financial advisers, since 2017, have CPD requirements of 45 hours per annum, of which nine hours must compulsorily include Ethics training.”

Given the significant drop in the number of financial advisers from almost 29,000 in 2018 to less than 15,500 currently, the possibility of another mass exodus would be a blow to the profession.

“The anecdotal evidence suggests that by 1 January 2026, the numbers of advisers may fall by between 2,000 to 4,000,” Rodrigues added.

“Despite the legislative imperative, some confusion exists amongst advisers as to the formal educational requirement of completing an accredited Ethics qualification.

“Understandably this confusion arises as a consequence of the implementation of the EPP in 2023. It is also understandable that financial advisers are concerned, that having met all of the ethics CPD requirements since 2017 and completing relevant tertiary studies, they must finalise a formal ethics qualification by 1 January 2026.”

He added: “Currently, the demand for quality advice is increasing as adviser numbers remain static with a potential for substantial decline post 1 January 2026.”

In order to “remove the inconsistency”, the AIOFP has urged Minister Mulino to exercise his “ministerial discretion” to remove the requirement to complete a formal tertiary ethics course for all professional financial advisers registered on the FAR.