Professional Standards Legislation Before Parliament Within Weeks

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Professional standards for advisers will return to the legislative agenda after the Minister for Revenue and Financial Services, Kelly O’Dwyer announced the Government would introduce legislation to mandate standards, before the end of the year.

Minister for Revenue and Financial Services, Kelly O'Dwyer - introduced the updated LIF reform Bill today
Minister for Revenue and Financial Services, Kelly O’Dwyer

While no firm date was given in the announcement for the introduction of the legislation into Federal Parliament, Minister O’Dwyer did confirm the shape of the legislation beyond what was previously announced on April 28.

At that time, the Federal Government announced existing advisers would not be required to complete bachelor degree level training and the start date for education and exam requirements contained within the new standards would be pushed out by 18 months from 1 July 2017 to 1 January 2019. (See: Govt Confirms Existing Advisers Will Not Need Degrees)

The Government had also announced the creation of an independent standards setting body with O’Dwyer stating this week that the costs of establishing that body would be met exclusively by the large banks and AMP.

Further operational costs would be paid through an industry funding model, which has yet to be developed, but is earmarked for implementation after the establishment of the standards body.

The announcement also stated advisers would operate under a single, uniform code of ethics – a position resisted by the Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) in their initial submissions on the first draft of the legislation, but subsequently agreed to on the condition this new code was consistent with established codes and overseen by professional bodies. (See: P-Plates Proposed For New Advisers)

The introduction of legislation to Federal Parliament will be the first time advisers will see the legislation in its final form.

In announcing the pending introduction of the legislation, O’Dwyer stated the new code would be overseen by professional associations using ASIC approved compliance schemes to monitor adherence to the code including the ability to take disciplinary action against advisers who don’t comply with the code.

The introduction of legislation to Federal Parliament will be the first time advisers will see the legislation in its final form. Advisers were able to review the first draft of the legislation but the second draft was released in April to industry stakeholders only for targeted consultation.

AFA Chief Executive, Brad Fox said the announcement of the upcoming introduction of the legislation was good news for advisers and consumers as it was another step towards financial advice becoming a widely recognised and appreciated profession and would remove confusion around the role of a financial adviser.

Fox said the AFA would continue to find sensible transition pathways for existing advisers and those who hold the Fellow Chartered Financial Practitioner (FChFP) designation but encouraged advisers to take note of the transition dates and begin upgrading their qualifications.

FPA Head of Policy and Government Relations, Ben Marshan said the legislation would provide clarity for advisers and sufficient time to transition to the new professional and education standards.

“This new regime is a comprehensive package that includes long-awaited enshrinement of the term financial planner/adviser, education requirements for both new and existing financial planners, an industry-wide code of ethics and ongoing CPD,” Marshan said.