Clients need to know if advisers are qualified: FPEC

In its submission to Treasury’s consultation on the experience pathway for financial advisers, FPEC said that work experience on its own is “unlikely to be sufficient to demonstrate that a professional possesses the appropriate specialised level of knowledge and skills” and recommended that all advisers still be required to hold a relevant degree.

“Whilst education on its own will not prevent the provision of poor advice, a combination of minimum education standards and hands-on experience is likely to provide clients with the best safeguards that their financial adviser is competent to deliver advice that is in their best interests,” FPEC said in its submission.

It added: “We continue to advocate for the fact that all financial advisers should continue to meet the requirement of the Corporations Act 2001 to have an approved degree (AQF level 7 or above) or equivalent by 1 January 2026 to ensure a consistent and robust education standards framework is in place.

“Such a requirement simplifies and provides clarity on the specific pathway and units of study an individual must complete to meet the minimum education standard.”

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.

FPEC added that the removal of a previously required qualification standard would be unfair to those that have already undergone study, and that clients should know whether their adviser has a relevant degree.

“We believe it is unfair and inequitable to initially mandate that existing advisers be required to undertake a formal qualification, only to remove this requirement when so many proactive advisers have spent considerable time and cost undertaking formal study towards establishing financial advice as a profession,” the submission said.

“If the requirement to complete formal study is removed, we believe we need to have the means to recognise and differentiate those advisers who had completed the additional qualifications from those who have used the experience pathway.

“Clients and consumers would be interested to know if their adviser holds appropriate formal qualifications, and this could be highlighted in ASIC’s Financial Adviser Register.”

In the event that the experience pathway continued as outlined, the body also advocated that, at a minimum, advisers should complete an “FAS-approved bridging ethics unit”, while also pushing for a sunset clause.

“If existing advisers applying under this education pathway do not undertake a formal qualification, but rather rely on their experience as demonstrating competency, we strongly recommend the inclusion of a sunset clause to place a time limit of 10 years on existing advisers to utilise this pathway,” FPEC said.

“This will contribute to ensuring that consumer trust in financial advice as a profession is not diminished.”

In May, Financial Services Minister Stephen Jones ruled out a sunset clause in a video message to the Stockbrokers Conference.

“This bill will recognise the qualification that comes with a decade of experience, while maintaining a clean record on the adviser register. There will be no sunset clause on this qualification,” the minister said.