The Financial Adviser Standards and Ethics Authority (FASEA) has confirmed advisers will be able to gain four credits for holding the Advanced Diploma of Financial Planning and an industry designation, and has altered the focus of the proposed Financial Adviser Examination.
In the first official statement from the Authority on education standards since the release of consultation papers in July, FASEA confirmed comments from the Assistant Treasurer, Stuart Robert, that existing advisers with the ADFP would be eligible for two course credits.
It also confirmed that advisers who held the FPA’s Certified Financial Planner (CFP) designation or the AFA’s Fellow Chartered Financial Planner (FChFP) designation would be eligible for a further two credits (see: FASEA Win For Advisers).
FASEA has, however, placed timeframes on when those designations will be considered eligible with advisers who attained the CFP after 2007 or the FChFP after 2014 eligible for credits. No timeframes have been placed on when an adviser had attained the ADFP, confirming what a FASEA spokesperson told Riskinfo in late October (see: No Cut-Off Date for ADFP Credits).
The details were released as the Authority begins the release of legislative instruments for each of its proposed standards which will be open for consultation until mid-December before the release of finalised standards
Study Units Required
The Authority has also added a new method for people who wish to enter the advice profession from another career with the Post Graduate Career Changer pathway requiring new entrants to complete an approved eight-unit Graduate Diploma. New entrants choosing this pathway will be able to seek Recognition of Prior Learning (RPL) from an education provider, and may be able to reduce the number of units required.
A newly released Standards Summary from FASEA shows that only existing advisers with no degree and no other form of training, including the ADFP and industry designations, will be required to complete all eight units of a Graduate Diploma, as will new advisers undergoing a career change. Most advisers, including those with non-relevant degrees will be required to complete seven units or less by 1 Jan 2024.
New advisers with no formal education will still be required to hold a Bachelor degree, and all advisers will be required to complete a single unit on FASEA’s Code of Ethics.
In releasing the new Standards, the Authority also announced that it had made changes to the Financial Adviser Examination, reducing it from five sections to three which “…will focus on applied knowledge acquired in actual financial advice scenarios”.
The three areas will be:
- Corporations Act – with an emphasis on Chapter 7 – Financial services and markets
- Financial Advice Construction – suitability of advice aligned to different consumer groups, incorporating consumer behaviour and decision making
- Applied ethical and professional reasoning and communication – incorporating FASEA Code of Ethics and Code Monitoring Bodies
FASEA stated the exam will be 3.5 hours in length, including reading time, will consist of multiple choice and written response questions and has confirmed that it will be open book exam for the part relating to the Corporations Act (see: FASEA Adviser Exam to be Open Book For Corps Act).
Resits will be available and a curriculum framework, recommended reading lists and a practice exam will be made released to advisers.
The new standard also stated that CPD hours for advisers will be set at 40 hour per year, instead of the 50 hours first proposed (see: Advisers May Face 50 Hours of CPD), of which 70 per cent will need to be approved by the licensee.
The Authority also announced that new advisers practicing during their first ‘professional year’ of practice will be titled Provisional Financial Adviser or Provisional Financial Planner, and will be required to undertake a professional year comprising 1600 hours, of which 100 hours is to be structured training.
FASEA stated it made the changes after receiving around 800 submissions during the consultation period following the release of a series of draft guidance papers in the first half of 2018.
“FASEA has taken time to listen, analyse and reflect on those submissions in reviewing each standard,” the Authority noted, adding that much of the original content of the guidance papers was supported by the submissions.
FASEA Chief Executive, Stephen Glenfield said the consultation process assisted FASEA in creating standards which addressed industry and consumer needs as well as balancing the Authority’s legislative obligations.
“Industry and consumer feedback has helped to create a balanced set of standards that, taken as a whole, offer a workable framework for how the industry will evolve into the future – for the benefit of both advisers and consumers,” Glenfield said.