On Wednesday, the Australian Securities and Investments Commission (ASIC) released guidance on the experienced provider pathway for financial advisers and how an experienced provider can access the pathway.
In most cases, advisers can rely on the experienced provider pathway as an alternative to completing a degree or an equivalent qualification if they meet the definition of “experienced provider”.
Specifically, an individual must have been a relevant provider for at least 10 years, or more accurately 3,650 days during the period from 1 January 2007 to 31 December 2021, and had a clean disciplinary record as at 31 December 2021.
The period does not need to be consecutive and allows for career breaks as long as the 3,650-day threshold is met.
Financial Advice Association Australia (FAAA) general manager for policy, advocacy and standards Phil Anderson clarified that there is another specific cut-off that could inhibit the ability of an adviser meeting this definition – the day they ceased being authorised.
“If they were still on the register on the exam cut-off date, then they no longer qualify as an existing adviser. Therefore, they lose all of the grandfathering that existed with respect to the education that they would be required to do and the requirement to do the professional year,” Anderson said.
“It was something that came up quite a few years ago, and then it was put in that legislation in 2021, that made it clear that you could retain the existing adviser status as long as you were not on the register at the time of your exam cut-off day.”
The exam cut-off day is 1 January 2022, or 1 October 2022 for existing providers who qualified for the exam extension by sitting the exam at least twice before 1 January 2022.
“An existing provider who did not pass the financial adviser exam by their exam cut-off day and remained authorised to provide personal advice on their exam cut-off day cannot rely on the experienced provider pathway, even if they have subsequently passed the exam,” ASIC said in the guidance.
“However, an existing provider who did not pass the exam by their exam cut-off day, but was not authorised on their exam cut-off day (because for example, they were on a career break), may access the experienced provider pathway once they have passed the exam if they meet the definition of ‘experienced provider’,” ASIC added.
Essentially, a single day difference of no longer being authorised could be the difference between being able to access the pathway or not.
Importantly, ASIC explained that it does not have the power to provide an exemption from any of the criteria for accessing the experienced provider pathway or to modify how the eligibility criteria apply.
In its guidance, the regulator provided an example of how an experienced provider can utilise the pathway if they stopped being authorised to provide personal advice before 1 January 2022:
Michael was authorised to provide personal advice from 1 July 2007 to 1 July 2015. Michael then pursued a different career, before returning to the industry and being authorised to provide personal advice from 1 January 2018 to 30 December 2021. During this time, Michael sat the financial adviser exam once. However, he failed the exam.
On 1 December 2023, Michael decides that he wants to return to working as a relevant provider. Michael assesses that he meets the 10 years’ experience requirement having been authorised for over 10 years during the 15-year period between 1 January 2007 and 31 December 2021.
Since Michael’s authorisation to provide personal advice ceased before his exam cut-off day (i.e. 1 January 2022) and, as at 31 December 2021, he had never been banned or disqualified from working as a relevant provider or given an enforceable undertaking to ASIC, Michael is eligible to access the experienced provider pathway once he passes the financial adviser exam and makes a written declaration.
After Michael has passed the exam, his new AFS licensee appoints him to the financial advisers register and registers him. He has until 31 December 2025 to make a written declaration and must give a copy of the declaration to his authorising AFS licensee as soon as is practicable after making the declaration.
As is always, make everything just so hard to understand and comply with For what… !