On Wednesday, Minister for Financial Services Stephen Jones introduced Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 to Parliament, which includes measures to recognise experienced financial advisers who pass the exam, have 10 years of experience, and a clean practice record.
According to the bill’s explanatory memorandum, there are 10,030 practising advisers that were first authorised in 2011 or earlier, which is the cut-off date for eligibility of the pathway.
Citing data from the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) prior to their merger, the government estimated about 6,520 advisers with 10 years of experience would benefit from the experience pathway as they have not yet met the education requirements to remain an adviser.
It also estimated that 2,086 advisers were not intending to remain in the industry after 1 January 2026, which is the deadline for existing financial advisers with no degree to attain an approved qualification.
In a speech to the House of Representatives on Wednesday, Mr Jones said: “By better recognising the experience of long-serving financial advisers, the government is providing a pathway for experienced advisers to remain in the industry.
“This means that new entrants have the benefit of their experience through mentoring, through supervision and through employment. It also means that more Australians will have access to financial advice than would otherwise be the case.
“The government is committed to an advice industry with strong professional standards that give Australians access to high-quality financial advice and to do this by not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.”
While he did not mention a sunset clause in his speech, the explanatory memorandum explained that introducing a sunset clause would unnecessarily complicate the legislation and only impact a small number of advisers.
“Conditional support was usually caveated with the desire to ensure the inclusion of a ‘sunset’ date to only allow the experienced pathway to be available until a set time in the future,” the document said.
“The primary justification for this position was to ensure that advisers currently in their 30s and 40s, who qualify for the experienced adviser pathway, were precluded from being able to practise for decades without meeting any further education requirements. Upon analysis of the data, a sunset date is not considered necessary, and it would complicate the legislation.
“Data from the Financial Advice Register shows that an estimated 5,800 advisers are in their late 40s or older and will form the majority of advisers eligible for the experienced pathway. The proposed sunset date was 15 to 20 years, when a majority of advisers would be retiring. There was a trade-off between including this additional limitation and the complexity it added to the system and legislation and any perceived protection it provided.”
In a video message to the Stockbrokers Conference held in Sydney in May, Mr Jones confirmed that there would be no sunset clause.
“This bill will recognise the qualification that comes with a decade of experience, while maintaining a clean record on the adviser register. There will be no sunset clause on this qualification,” the minister said at the time.
Responding to Mr Jones’ announcement, Financial Advice Association Australia (FAAA) chief executive Sarah Abood told ifa that the FAAA is disappointed.
“We’re disappointed that the sunset clause suggestion has not been included,” she said at the time.
“However, it is a positive that advisers are getting more clarity on the operation of the pathway, and we will continue to work with the minister and Treasury to help ensure implementation is smooth.”
The FPA and AFA had previously lobbied for the inclusion of a sunset clause to end on 1 January 2032.
“We believe that this measure should be better targeted to older advisers, with the inclusion of a 10-year sunset clause,” Ms Abood said.
“This would represent an appropriate transition for established, experienced financial advisers and planners with a clean compliance record. Otherwise, we will be in a position whereby planners currently in their thirties could continue to practice indefinitely with no further qualifications required.”
Bit of conflict of interest from the FAAA at play here perhaps? Any reform removing stifling advice regulations is welcomed, and big credit to Minister Jones and Labor (who I don’t normally support) on this. The vast majority of advisers out have always been out there trying to help clients and dare to earn a living at the same time. Offenders such as fly-by-night con artists (ie. the Melissa Caddicks) and organisations big enough to pay fines will continue to do the wrong thing, and ASIC will continue to fail noticing them until it’s too late.
What an absolute mockery of the profession. We were made to study to be classed as a professional and it all gets undone if this bill is passed.
Big slap in the face for all of us who went out and completed the study.
best win in years….. finally can hang up the books and focus on helping clients retire….. good day to be a planner
it is totally fine to require further qualifications, it just should never have been foisted upon us without reasonable notice or a viable pathway.
Back to the future we go with a two-tier pool of Advisers. Those with qualifications, and those without.
Unlike the grandfathered CFP which was given to many advisers in their 30s and 40s who are still around and will be for some time, it seems there are very few younger advisers likely to qualify for the experience exemption.
Rather than FAAA telling the government to apply a sunset clause where it’s not really needed, they should get their own house in order by applying a sunset clause to grandfathered CFPs.
Anon comments carry little weight
That’s a total red herring. Fasea even acknowledged there were two different cohorts of CFP Advisers when determining the Education Pathways for existing Advisers. Those who hadn’t done the CFP Certification course got no credit for the CFP.
But those who had done the full 5 unit CFP course at AQF 8 level were only given credit for two units. Tainted by the stench of the grandfathers.