In a video message to the Stockbrokers and Investment Advisers Association (SIAA) conference held in Sydney on Tuesday, Mr Jones announced that legislation will shortly be introduced to the Parliament to enact the experience pathway, while work on the pathway for new entrants will recommence later in the year.
“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.
“Mostly, this bill is providing us with time to manage the transition while we clean up the settings on education qualifications to facilitate and improve pathways for entries into the system. I’ll be doing more work on a pathway for new entrants over the second half of the year.”
The new adviser pathway and the experienced adviser pathway have been closely linked since the previous Liberal federal government issued a consultation in December 2021, however, there was little movement prior to the election.
The Labor government then launched its own consultation in August 2022, but the new entrant pathway was again overshadowed by the experience pathway.
SIAA chief executive Judith Fox shared that while it appeared the new entrant pathway was on the backburner while the experience pathway took centrestage, the government can now shift focus.
“On the qualification pathway for new entrants, we had some success because we got the government to consult on changes to that pathway, and that was despite opposition from financial planning academics and others who continue to insist on very narrow education qualifications, which are not suited for those working in equity markets or on the investment side,” Ms Fox said.
“But there’s been no movement since that consultation, which was last September, and we do understand that further consultation is planned, which is going to be the third consultation on expanding the new entrant qualification pathway in three years.”
Speaking to ifa, Financial Advice Association Australia (FAAA) head of policy Phil Anderson said that the experience pathway was likely an easier issue for the government to tackle first.
“We did our submissions, but last August, the new government put a new consultation paper out and once again addressed both of those two parts to it,” Mr Anderson said.
“But solving the experienced adviser pathway seemed to be an easier thing to do, because we have greater flexibility for new entrants.”
Under the Treasury Laws Amendment (Measures for Consultation) Bill 2023: Financial Adviser Professional Standards, which is the bill that will legislate the experienced adviser standards, there are provisions to broaden the eligibility of new entrants.
These changes, according to Mr Anderson, are limited to additional flexibility around minor differences in eligibility rather than the more comprehensive changes outlined in the consultation paper.
“What happened with this most recent consultation around the draft legislation was they added a couple of extra things in, that were fixes to existing known problems,” Mr Anderson said.
“What they’ve got in the draft legislation is just flexibility for situations where there’s a minor technical difference between the costs someone has completed and what the prescribed standard is.
“It’s important because people are being prevented from doing the exam because they haven’t met the requirements that ASIC is fairly prescriptively applying. So, it’s important for a number of people that they can continue on with their career, but it’s not the wholesale change that has been talked about to fix the lack of flexibility and new entrants coming into advice.”
This most recent consultation, which ended in September last year, gave three proposals for new entrants:
- Streamline core knowledge areas from the current 11 to a proposed five.
- Allow education providers to self-declare that the degree they are offering teaches the core knowledge areas.
- Streamline the professional year by introducing more flexibility in how candidates are able to complete it, including the point at which they have to pass the exam.
The streamlined core knowledge areas proposed were taxation law, commercial law, financial advice regulatory and legal obligations, ethics and professionalism, and behavioural finance and client engagement.
“The streamlining of the core knowledge areas ensures that all financial advisers share a common foundation of knowledge and learning outcomes that will be applicable in a range of financial service industry roles,” the consultation paper said.
The self-declaration for education providers, according to the paper, would scrap the need for degrees to be approved and make the process less prescriptive.
“The intention of this approach is to remove the current process of education providers seeking approval of the degrees they offer, which is time-consuming, highly prescriptive, and does not eliminate risks of graduates not meeting the education requirements for technical reasons,” the paper said.
It is unclear how similar the upcoming consultation’s recommendations will be to those in the August paper, however, Mr Anderson stressed that making the process less prescriptive is key.
“The government doesn’t necessarily want to meticulously prescribe the minute detail around each of the approved courses, which is the model that FASEA has established. Can they come up with a solution that is more principles based rather than being so prescriptive?” he said.
“I think the two big things that the government has set out to do is to make changes to hold onto more of the quality, experienced advisers who are already around, but then looking forward is to make sure we can get more new entrants into the advice profession.”
The new entrant pathway will be fixed so that it ends up as it should have been all along, rather than the mess FASEA created.
Unfortunately it’s too late to properly fix the FASEA mess for existing advisers, so the “experience pathway” will be used as an imperfect workaround.