CPA warns industry needs ‘should not’ detract from gains, proposes tweaks to experience pathway

In its submission to the Treasury, CPA Australia has pushed for further amendments to the government’s proposed experience pathway after flagging some potential industry setbacks.

Much like the Joint Associations Working Group (JAWG), of which it is a part of, CPA proposed a sunset date of 1 January 2032, highlighting that the need to retain veteran advisers should not come at the expense of an appropriate qualification.

As such, the body argued that the industry’s short-term needs should not “detract from the gains made towards greater professionalism over the last few years”.

“While recognising the importance of experience, CPA Australia believes that it is also important to ensure the community can have confidence that all financial advisers are appropriately qualified,” the group said in its submission.

Moreover, CPA raised concerns regarding the possible eligibility of individuals who had left the sector to re-enter under the experienced provider pathway, emphasising the client risk that could ensue.

Specifically, CPA said it is concerned that there are no additional obligations for such individuals to re-enter, to ensure currency of knowledge relevant to the financial advice they would be authorised to provide to future clients.

“We believe this poses a potential client risk, given that the only other education obligation is to complete the standard financial adviser exam,” the group wrote.

To address this, CPA recommended that an individual who has been unlicensed for more than 12 months must undertake 20 hours of continuing professional development (CPD) relevant to their areas of authorisation in the immediate six months before being re-authorised under an Australian Financial Services (AFS) licence.

Much like the Financial Advice Association Australia, the CPA also emphasised the significance of requiring advisers to either successfully complete an approved ethics unit or hold membership in an association that satisfies specific criteria, as a prerequisite for eligibility in the pathway.

“This ensures a level of consistency with the statutory education standard to which all other existing financial advisers must comply; that is, completion of the Ethics for Professional Advisers bridging unit,” it said.

CPA also urged caution against the use of any specific references to “experienced financial adviser” on the Financial Advisers Register (FAR).

“This, or like terms, may not only be potentially misleading to users of the FAR, but it could also create division within the sector between financial advisers who may have been eligible to pursue the experienced provider pathway but elected to complete all required bridging units, and those who utilised the pathway provisions,” the body explained.

Finally, it added that “in the interests of consistency and proper accountability”, it would be appropriate that all individuals who seek to take advantage of the experienced provider pathway be required to complete a statutory declaration stating that they meet all determined eligibility requirements.