Government opens consultation on experience pathway

The government has opened consultations on an exposure draft bill and explanatory memorandum to deliver its election commitment to recognise experienced financial advisers who pass the exam, have 10 years of experience, and a clean practice record.

Dubbed the experience pathway, the proposal seeks to equate the worth of a degree with 10-plus years of experience in the industry.

Commenting on the announcement, Minister for Financial Services, Stephen Jones, said it was a “transition measure” aimed to stop the exodus of experienced advisers, with no history of misconduct.

“The Albanese government is committed to an advice industry with strong professional standards that gives Australians access to high quality financial advice. This has been made more difficult by the previous government’s mishandling of the new education and qualification framework,” Mr Jones said.

“Since 2019, over 10,000 financial advisers have left the industry in response to new standards. Many were unsuited to the requirements of the new industry, which include professional qualification. However, this has pushed some experienced advisers, with no history of misconduct, out of the industry, reducing access to advice,” he continued.

Under the proposed measure, an adviser would be deemed to have met the education requirements if they:

• have 10 years (cumulative) experience providing advice between 1 January 2007 and 31 December 2021; and
• have not recorded any disciplinary action on the Financial Advisers Register before 31 December 2021.

Advisers would still need to pass the exam.

The draft legislation also allows new entrants to apply to the Minister to have their degree recognised and for education providers to confirm that a person has completed the requirements of an approved degree.

According to Treasury, these amendments would address cases where would‑be advisers currently fail to meet the education standards for technical reasons.

Comparison of the new law and current law

While the current law obliged an existing adviser to complete an approved qualification by 1 January 2026, the new law equates a minimum of 10 years of full-time experience with an approved degree.

Under both the current and the new law, advisers need to pass the exam and comply with continuing professional development requirements. However, in order to be eligible for the experience pathway, advisers also need to have a clean disciplinary record.

Regarding new entrants, under the current law, new entrants were asked to complete an approved qualification, including meeting all the conditions prescribed for that approved qualification, as determined by the Minister in the Approved Qualifications Determination.

However, under the new law, the Minister may approve one or more ways of satisfying the conditions for an approved qualification. This, the Treasury explained, provides greater flexibility to new entrants, recognising that there may be different study pathways available to satisfy the education and training standard.

Moreover, under the new law, new entrants with a domestic qualification may apply to the Minister for individual approval, where that person has completed an approved qualification, as determined by the Minister in the Approved Qualifications Determination, but not met all the conditions attached to that qualification.

Financial advisers who are registered tax agents are also set to benefit under the new law, with the government proposing to relieve them of the need to meet the additional education requirements.

The government is welcoming responses to its consultation until 3 May. 

The experience pathway was first announced by Financial Service Minister Stephen Jones ahead of the federal election in 2022 which saw Labor assume government.

Despite the optimistic expectations of certain financial advisers, progress towards fulfilling this promise was slow. It wasn't until December of last year that the Minister finally provided an update, offering assurance that the government would commence consultations and have provisions prepared for legislation by the first half of 2023.

Just last week, WealthData suggested that as many as 3,166 advisers could benefit from the government’s announcement.