Body shares concerns over dilution of advice quality in experience pathway

While the government has not yet disclosed the method of delivery for the experience pathway, it has released the submissions it received on the exposure draft legislation earlier this year.

In its submission to government, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) expressed concern that the pathway designed to help keep more advisers in business will actually disadvantage “exemplar advisers” and dilute the quality of advice.

In April, the government released the 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.

Currently, existing financial advisers with no degree must have an approved qualification by 1 January 2026.

The ASBFEO argued that while it supports the introduction of a transitional arrangement for experienced financial advisers to meet education and training standards, it believes that “striking an appropriate balance between flexibility and rigour in education requirements is imperative to maintaining high standards of advice”.

“The government should consider requiring advisers under the transitional arrangement to complete additional hours of continuing professional development,” the office said.

“We acknowledge the need to appropriately recognise advisers’ long-term experience and commitment to compliance obligations in lieu of tertiary education. However, the loosening of the education requirements as one of the four education and training conditions outlined in the Corporations Act risks disproportionately disadvantaging exemplar advisers and diluting the quality of advice.”

The ASBFEO said that since additional requirements for standard two (exam) cannot reasonably be imposed and standard three (experience) is already leveraged, “we suggest that additional hours of continuing professional development be implemented through the existing development requirements in standard four to further strengthen the integrity of education standards for financial advisers”.

The experience pathway was introduced to Parliament mid-June.

According to the bill’s explanatory memorandum, there are 10,030 practising advisers who were first authorised in 2011 or earlier, which is the cut-off date for eligibility of the pathway.

Citing data from the Association of Financial Advisers (AFA) and the Financial Planning Association (FPA) prior to their merger, the government estimated about 6,520 advisers with 10 years of experience would benefit from the experience pathway as they have not yet met the education requirements to remain an adviser.

It also estimated that 2,086 advisers were not intending to remain in the industry after 1 January 2026.

In a speech to the House of Representatives at the time, Financial Services Minister Stephen Jones said: “By better recognising the experience of long-serving financial advisers, the government is providing a pathway for experienced advisers to remain in the industry.

“This means that new entrants have the benefit of their experience through mentoring, through supervision and through employment. It also means that more Australians will have access to financial advice than would otherwise be the case.

“The government is committed to an advice industry with strong professional standards that give Australians access to high-quality financial advice and to do this by not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.”