Advisers feel ‘aggrieved’ by experience pathway proposal

Advisers strongly opposed to the experience pathway are driven by a sense of being “aggrieved”.

In its submission to the government’s exposure draft bill to deliver its election commitment to recognise experienced financial advisers who pass the exam, have 10 years of experience, and a clean practice record, the Financial Advice Association Australia (FAAA) said many advisers feel “aggrieved” by the timing of the announcement.

“A key factor influencing member sentiment about this proposal is the timing of its introduction,” the FAAA wrote.

“The transition period by which time existing planners/advisers must have completed an approved qualification, commenced more than four years ago on 1 January 2019. Many existing financial planners/advisers, whose qualifications were not recognised by FASEA, have undertaken study during this period. Hence, some members feel aggrieved that they have invested substantial time and money in completing qualifications that now might not be required,” it continued.

The transition period ends on 31 December 2025, by which time all “existing advisers” must meet the requirements to be registered as a “relevant provider” or they will lose their “existing adviser” status for the purposes of the education standard.

However, the experience pathway proposes to fix that by deeming an adviser as having 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 (FAR) before 31 December 2021. Advisers would still need to pass the exam.

In its submission, FAAA also revealed that it had surveyed the draft legislation with 1,197 respondents, of which 50.9 per cent said they were supportive of the pathway, while 49.1 percent said were not in favour of the proposal as drafted.

However, of the 576 member respondents who indicated that they would rely on the “experienced provider” pathway if legislated, many were highly qualified with 73.1 percent currently holding a bachelor or higher degree or professional designation.

Additionally, the body highlighted that the previous education standard — ASIC’s Regulatory Guide 146: Licensing: Training of financial product advisers (RG146) — also significantly contributed to the opposition expressed towards the pathway.

“There is concern that some may still rely on the historic ability to be authorised to provide financial advice to retail clients by being “RG146 compliant”. There are many who question whether this is an appropriate level of education, and if it will impact consumer confidence in the profession,” it wrote.

Consequently, the FAAA expressed its disappointment that the government did not take action on its earlier recommendation for a competency-based experience pathway specifically designed for “existing providers”.

“We felt that this proposal offered a balance of greater recognition of qualifications completed by senior financial planners/advisers and their experience in providing financial advice to retail clients,” it said.

“Given these issues and risks, there is significant member concern about the unlimited application of the draft legislation and lack of a sunset clause for this measure.”

The FAAA is currently seeking three changes to the pathway, including a sunset clause; a requirement to complete an approved ethics course; and greater flexibility for long-term part-time financial planners/advisers.

It concluded that 78.6 per cent of its members, who responded to its survey, indicated they would support an “experienced provider” pathway if these changes were made to the requirements in the draft legislation.