Action needed to avoid education deadline ‘cliff’: AIOFP

The 1 January 2026 education deadline is set to compound the issues plaguing the financial advice sector, according to Association of Independently Owned Financial Professionals (AIOFP) executive director Peter Johnston.

“With no new advisers expected to join the profession [for very obvious reasons], up to 4,000 eliminated over education confusion, and the deregistration of those who don't give advice to avoid the CSLR levy, this scenario may incite a 'rush to the door' to avoid CSLR liabilities getting out of control,” Johnston said in a letter to sent to federal MPs.

“An 'Armageddon' scenario is quite possible for the profession during 2026.”

According to the AIOFP, the education deadline could wipe out somewhere between 2,000 and 4,000 financial advisers, given the ASIC warning from June that more than 4,600 advisers were yet to meet the qualifications standards.

Additionally, an AIOFP survey of its members found that around 30 per cent would leave advice in early 2026 if the Compensation Scheme of Last Resort (CSLR) remains in its current form.

This would lead to a considerably higher number of advisers leaving than the FAAA’s recent estimate of around 1,000.

“At the moment, the number that don’t qualify for either pathway look unreasonably high – over 4,000 – and we don’t think that’s the reality,” FAAA chief executive Sarah Abood said on a webinar last month.

“Our estimates are that around 1,000 advisers might be leaving at the end of this year. That’s based partly on data and partly on intention surveys that various providers have done. It’s a guess but it will be a decent dip at the end of this year.”

Whatever the number eventually lands on, Johnston has requested that the MPs push for a 12-month delay for the deadline to 1 January 2027 and an “ASIC-led intensive online education program established for current and prospective advisers attendance to understand the circumstances”.

However, there are just 15 parliamentary sitting days left in 2025, leaving little time for government intervention on either the education deadline or changing the structure of the CSLR.

On this front, the AIOFP wants the CSLR legislation to be “realigned with the original recommendations of the Ramsay review and commissioner [Kenneth] Hayne where the levy funding is spread across all financial services industry stakeholders not just financial advisers”.

“If these other stakeholders are held to account for their behaviour with levy participation they will more than likely adjust their conduct, a great outcome for consumer protection and the industry in general,” Johnston said.

“We suggest at least the other five stakeholders are included in the levy payments – trustees, custodians, research houses, platform administration services and auditors, we also suggest an annual levy fee across the entire funds management industry is implemented to protect consumers.”

Last week, Johnston called for a royal commission into ASIC and the managed investment scheme process, arguing that the long-standing focus on financial advisers as scapegoats has allowed other stakeholders – including ASIC, APRA, trustees, custodians, auditors, research houses, and institutions – to evade responsibility.

“For the last 30 years MIS has protected ASIC from litigation with their ongoing flawed conduct but it has thrown taxpayers ‘under the bus’ with consumer protection,” Johnston said.

“ASIC/APRA, trustees, custodians, auditors, research houses and institutions have evaded accountability with their role when financial products fail, they have cleverly, unfairly and most times collectively spun the blame onto financial advisers whilst slithering away for legal cover.”

He added: “It is time to drain the Canberra bureaucratic swamp with a royal commission to protect consumers.”