This week, the government opened a consultation on the highly anticipated experience pathway, which seeks to equate the worth of a relevant degree with 10-plus years of experience in the industry.
If an eligible adviser intends to rely on the new transitional arrangement for experienced providers, namely, those with a cumulative experience of 10 years providing advice between 1 January 2007 and 31 December 2021, and no record of any disciplinary action on the Financial Advisers Register, they must self-declare to confirm their compliance with all the criteria.
For authorised representatives of an Australian financial services licensee (AFSL), the government has proposed they “must” self-declare to their AFSL, which will subsequently lodge the representatives’ notice to the Australian Securities and Investments Commission (ASIC) on their behalf.
To this end, licensees will have a significant part to play in helping advisers adhere to the proposed standards, and their contributions during the consultation process are likely to inform the government’s resulting amendments to the Corporations Act.
Eugene Ardino, chief executive of licensee Lifespan Financial Planning, told ifa that he is optimistic about the experience pathway moving into this next phase.
“I think it is great that the experienced pathway finally seems to be proceeding and we look forward to contributing to the consultation,” he said.
In the event that the experience pathway gains bipartisan support, Mr Ardino urged other licensees to be proactive in supporting their advisers who may need to identify which side of the requirements they lie on.
“AFSLs should be able to do some form of due diligence to help advisers assess whether or not they qualify,” Mr Ardino said.
This is particularly important since the exposure draft bill states that “Australian financial services licensees are held accountable for authorising an ‘experienced provider’ to provide financial advice as a representative of that licensee”.
Moreover, also included in the bill is mention of possible criminal and/or civil penalties if either the financial adviser or licensee gives false or misleading information.
Asked whether misuse of the pathway could be an unintended consequence, Mr Ardino deemed it “very unlikely”, but reiterated the need for licensees to integrate a level of due diligence into the process.
He also added that the proposed method of reporting directly to ASIC does not pose an issue for licensees.
“I don’t see an issue with AFSLs needing to report data to ASIC as this is the current system with other information being passed to ASIC, so it seems consistent,” Mr Ardino concluded.
The submission period for the consultation on the experience pathway closes 3 May 2023.
This legislation won’t pass before the end of this financial year, so I still can’t understand why the experience end date is 2021. What about the last 18 months, which have been extremely challenging in terms of investment markets and global economies in decline???
Wouldn’t be surprised if ASIC starts charging licensees a fee to process these declarations.
What is the point of the ASIC registers – namely the FAR – if not to confirm this? How could this be misused? This is just a case of the usual suspects taking something which is simple and making it complicated.
Wouldn’t it be fairly simple for ASIC to just take the years of experience off the FAR, rather than a self declaration?
I don’t think ASIC is aware of anything such as ‘simple’…
Settle down – That’s way too much common sense.
The FAR only records the length of time, it does not report that they have been fully authorised advisers for an entire 10 year period.
Why 2007 to 2021 and January 1 2026?