1.6 More recent developments

Before I turn to that matter, it remains to say something briefly about more recent developments.

In February 2017, the Government announced changes designed to lift the professional, education and ethical standards of financial advisers.[1] The changes include compulsory education requirements, supervision for new advisers, a code of ethics for the industry, an industry exam and ongoing annual professional development obligations. Details regarding these changes (as at April 2018) were set out in Part B of the Commission’s sixth published Background Paper.[2]

A new Commonwealth standard setting body, the Financial Adviser Standards and Ethics Authority (FASEA), was established in 2017 to develop these requirements and govern the professional standing of the financial advice sector.[3] FASEA will develop the new code of ethics, and professional organisations will be able to apply to ASIC for approval as code monitoring bodies. All advisers will be required to subscribe to the code of ethics of a monitoring body by 1 January 2020.[4]

Other requirements commenced on 1 January 2019.[5] From that date, new advisers are required to hold a relevant degree before they are eligible to sit the exam and commence a year of supervised work and training.[6] Existing advisers have two years to pass the exam (by 1 January 2021) and five years to reach a standard equivalent to a degree (by 1 January 2024).[7]

Some entities moved to implement these new standards sooner. For example, on 7 May 2018, ANZ announced it would begin implementing a range of initiatives to ‘help improve the quality of financial planning, and customer remediation when things go wrong’.[8] One of those initiatives was that ANZ will ‘[o]nly employ new planners with a relevant undergraduate degree and industry certification, and require existing planners to be enrolled in further necessary training by January 2019’.[9]

[1]The Hon Kelly O’Dwyer MP, Minister for Revenue and Financial Services, ‘Higher Standards for Financial Advisers to Commence’ (Media Release, 9 February 2017).

[2]Background Paper No 6 (Part B), 812.

[3]See generally Treasury, Financial Adviser Standards and Ethics Authority Limited (FASEA) <https://treasury.gov.au/programs-and-initiatives-banking-and-finance/financial-adviser-standards-and-ethics-authority-limited-fasea/>.

[4]Treasury, Module 2 Policy Submission, 15.

[5] See generally ASIC, Professional Standards for Financial AdvisersReforms (17 June 2018) <http://asic.gov.au/regulatory-resources/financial-services/professional-standards-for-financial-advisers-reforms/>.

[6] See, generally, Corporations Act Ch 7 Pt 7.6 Div 8A.

[7] See, generally, Corporations Act Ch 10 Pt 10.23A.

[8] ANZ, ‘ANZ Unveils Plan to Improve Financial Planning’ (Media Release, 7 May 2018).

[9] ANZ, ‘ANZ Unveils Plan to Improve Financial Planning’ (Media Release, 7 May 2018).