Adviser Professional Standards

The Adviser Professional Standards are intended to raise the education, training and ethical standards of financial advisers by requiring those who provide personal advice to retail clients to meet the following education and training standards:

• qualifications standard
• exam standard
• continuing professional development standard

New advisers who enter the profession from 1 January 2019 (or those who otherwise don’t meet the transitional rule requirements) will also need to meet the work and training standard, which requires them to undertake a 12-month supervision and training program, known as the ‘Professional Year’.

The Minister is responsible for setting the professional standards, whilst ASIC is responsible for implementing and overseeing the professional standards.¹ Legislative instruments for all standards were registered in 2018 and 2019 by the Financial Adviser Standards and Ethics Authority (FASEA). These standards continue in force, as if they were instruments made by the Minister until such time as the Minister amends them, or makes new standards.

Who is required to meet the new standards?

Financial advisers need to meet the standards if they provide personal advice to retail clients on financial products, other than basic banking products, general insurance products, consumer credit insurance, or a combination of any of these products. This includes accountants who give personal advice under a limited Australian Financial Services Licence (AFSL).

For simplicity, we use the term ‘Adviser’ to refer to those who are subject to the standards.

Transitional arrangements – education and exam requirements

Transitional arrangements apply to ‘Existing Advisers’, that is, those who were authorised to provide personal advice to retail clients at any time from 1 January 2016 to 31 December 2018 (and who were not subject to a banning order or enforceable undertaking not to provide financial product advice or financial services generally on 1 January 2019). Advisers can demonstrate they are an Existing Adviser by having had a status of 'current' on ASIC’s Financial Advisers Register at any time during that period. Without this recognition, ASIC has stated that it will treat an Adviser as a New Entrant to the industry.²

The transitional arrangements give Existing Advisers until 1 January 2026 to meet the qualifications standard. However, recently enacted legislation³ provides an exemption from the qualification standards for Existing Advisers who meet the definition of an ‘experienced provider’.  

An ‘experienced provider’ is defined as an individual who:

• between 1 January 2007 and 31 December 2021 was authorised to provide personal advice to retail clients on financial products, other than general insurance products, consumer credit insurance and/or basic banking products (post 1 July 2012), for a total cumulative period of 10 years (that is, 3,650 days);
• has a clean disciplinary record as at 31 December 2021, i.e. has never been subject to a banning order or enforceable undertaking by this date.

Importantly, the qualification standards do not cover education requirements to provide tax (financial) advice services. As a result, Existing Advisers may still have study to complete certain courses before 1 January 2026 to continue to provide tax (financial) advice services from this date, regardless of their eligibility to use the experienced provider pathway.

Existing Advisers are not required to meet the work and training standard (i.e. are not required to undertake a Professional Year).

Milestones

The timeline below shows the key milestones for the reforms.

To meet the qualifications standard, a person is generally required to complete a bachelor or higher degree, or equivalent qualification, approved by the Minister in the Approved Qualifications Determination.

Unlike New Entrants who are required to have completed an Approved Degree before they can be authorised to provide personal advice to retail clients, Existing Advisers must either meet the experienced provider pathway,  or they must complete one of the following education pathways before 1 January 2026:

1. Approved degree
2. Relevant degree
3. Non-relevant degree
4. No degree

The specific requirements of each education pathway depend on the amount and nature of education an Existing Adviser has already completed. Detailed information on the various options available to Existing Advisers who do not meet the experienced provider pathway are outlined in a Policy Statement, which incorporates the recognition of prior learning and how this applies to each pathway.⁴

Two extremes

For Existing Advisers who do not meet the experienced provider pathway, the minimum additional education required will be a single Bridging Course (on Ethics and Professionalism) and the maximum will be an Approved Graduate Diploma of eight subjects (however, completion of an Approved Degree containing 24 subjects will also meet the requirements).

Advisers required to complete a single Bridging Course

The single Bridging Course requirement will apply to an Existing Adviser who does not meet the experienced provider pathway, and already holds any of the following:

• an Approved bachelor’s degree, graduate diploma or master’s degree

Approved Degree

A range of degrees from several education providers have been approved for New Entrants which are also applicable to Existing Advisers.⁵ These cover a range of bachelor’s and postgraduate degrees, generally with majors/specialisations in financial planning. Conditions for each degree are specified, for example, particular subjects must have been completed.

• a Relevant Degree

Relevant Degree

This will be a bachelor’s degree, graduate diploma or master’s degree in a related field of study that contains at least eight courses in one or more of the following fields of study in any combination:

• Financial planning
• Accounting
• Taxation/tax law (as approved by the Tax Practitioners Board)
• Finance law
• Finance
• Business law (as approved by the Tax Practitioners Board)
• Investments
• Estate law 
• Banking
• Economics

• a Relevant Degree in addition to study towards a Professional Designation which was awarded 2 credits

Study towards an Approved Professional Designation

Recognition is provided for completed study towards the following Professional Designations:⁸

• a bachelor’s degree, graduate diploma or master’s degree that is not considered to be relevant (that is, there are less than eight courses in the fields of study listed under ‘Relevant Degree’ above) in addition to:
  • an Advanced Diploma of Financial Services/Planning;
  • study towards an Approved Professional Designation awarded 2 credits (as outlined above); and 
  • between four and seven courses in one or more of the fields of study listed under ‘Relevant Degree’ above in any combination.

Advisers required to complete full Graduate Diploma

Unless an Existing Adviser meets the experienced provider pathway, the eight-subject Graduate Diploma will need to be completed by an Existing Adviser without any of the following:

• formal degree qualification
• Advanced Diploma of Financial Services/Planning, or
• Approved Professional Designation.

Advisers required to complete between one and eight courses

Many Advisers will fall somewhere in between these extremes and will be required to complete between one and eight courses before 1 January 2026.

Foreign qualifications

Advisers with foreign qualifications will need to apply to Treasury for approval of their qualification. The foreign qualification needs to be equivalent to an Australian bachelor’s or higher.

In addition, Foreign Advisers (i.e. those who qualify as an Existing Adviser based on their overseas work history) must contact ASIC to confirm their work history prior to applying to Treasury for their foreign qualification assessment.

For Existing Advisers with foreign qualifications, Treasury will determine if the qualification is either relevant or non-relevant (similar to Existing Advisers with Australian qualifications). This, together with any additional qualifications or Approved Professional Designations the Adviser holds, will determine the amount of additional study required.

Implications if education not completed in time

An Existing Adviser who does not meet the experienced provider pathway and does not complete the required education before 1 January 2026 will cease to be authorised as an Adviser from that date. In order to become authorised again, the requirements for New Entrants will need to be met, including the completion of a Professional Year.

All Financial Advisers must successfully complete the Financial Adviser Exam administered by ASIC. ASIC has contracted the Australian Council for Educational Research (ACER) to develop and administer the exam.

New Entrants must complete their approved degree before sitting the Exam, and must pass the Exam before starting the third quarter of their Professional Year. Please refer to our article on Professional Standards for New Entrants for more information on the Professional Year.

Knowledge and skills assessed

The Exam covers three areas of knowledge and skills:

• Financial advice regulatory and legal obligations
• Applied ethical and professional reasoning and communication, and
• Financial advice construction.

Format

The Exam consists of at least 70 questions, including a minimum of 64 selected response (multiple choice) and six written response (case study style) questions.

The duration is 3.5 hours, including 15 minutes of reading time, and is open book for selected statutory materials.

Candidates with special needs can request support for appropriate assistance to allow them to sit the Exam.

Registration

Before you can register for the Exam, your Licensee must apply for an exam eligibility number with ASIC. You will need to use this number to book to sit the Exam. Advisers need to register in advance to sit the Exam, and specific booking periods apply to each exam sitting. The cost of the Exam is $1,500 and is payable for each booking (i.e. each time it is attempted).

Exam locations and scheduling

The Exam is only available via remote proctoring. However, if you have a disability or other health-related needs, you can apply for reasonable adjustments that may include sitting the Exam in an exam venue.

The timetable of Exam dates is published on ASIC’s website, along with registration procedures.

Special consideration is available where there are exceptional circumstances beyond the control of the candidate. This enables the Exam to be sat later at no additional fee.

Results

An Adviser will need to pass the Exam to a credit level. Results are released between 6 and 8 weeks after sitting the Exam.

A candidate who fails the Exam may, for a fee, apply for a one-time review of the marking of the written response questions.

Resits after failed attempts

There is no explicit limit on the number of times the Exam can be attempted.

Preparation – learning and study materials

ASIC has published preparation materials, including a Candidate information booklet, Exam Preparation Guide, Practice question guidance, step-by-step guide to remote proctoring, as well as Exam preparation videos.

Implications if Exam not passed in time

An Existing Adviser who did not pass the Exam before their exam cut-off date (either 31 December 2021, or 30 September 2022 if the relevant provider had sat and failed the exam twice), and was still authorised to provide personal advice to retail clients on that date, will need to complete the requirements for New Entrants, including the completion of a Professional Year.

However, Existing Advisers who left the industry before their Exam cut-off date must sit and pass the Exam prior to re-entering the industry.

The continuing professional development standard requires all Advisers to participate in development programs and activities that ensure they maintain and extend their professional capabilities, knowledge and skills including keeping up to date with all regulatory, technical and other developments relevant to professional financial advice.

Licensees have certain obligations to support Advisers in meeting these requirements. The requirements are based around a licensee’s CPD year.

CPD year

This is a 12-month period beginning on a date determined by the licensee.

The CPD year can start at any time during the calendar year. The licensee has an obligation to notify ASIC of the start date.

The continuing professional development standard does not apply to New Entrants during their Professional Year, as they are already required to complete structured training during that period.

Adviser obligations

In summary:

• an Adviser needs to complete at least 40 hours of CPD per CPD year for those working full-time or 36 hours for those working part-time throughout the year, subject to the consent of the Adviser’s licensee
• at least 70 per cent of the CPD hours must be on activities approved by the Adviser’s licensee (i.e. 28 hours per CPD year for a full-time Adviser)
• a minimum number of hours per CPD year must be spent on CPD categories as shown in the following table

• a maximum of four hours of professional or technical reading can be counted towards meeting the requirements 
• a maximum of 30 hours of formal relevant education provided by an education provider can be counted towards meeting the requirements   

Formal relevant education

This may include:

• an Approved Degree or equivalent qualification
• education or training provided or approved by a professional association
• formal education or training towards qualifications or designations relevant to practice as an Adviser.

• record-keeping requirements apply
• special rules will apply to Advisers who take a career break
• Advisers are required to have a written CPD plan for each CPD year.

CPD plan

• An Adviser’s CPD plan must be in place before the start of the CPD year.
• The CPD plan must identify areas for improvement in, and development and extension of, the Adviser’s competence, knowledge and skills and describe the CPD activities the Adviser will complete during the CPD year to achieve those improvements.
• If the Adviser is employed by a licensee, the Adviser must give the employer a copy of the plan.

Education that is measurable, appropriately assessed and leads to further qualification outcomes for participants is preferred, as it more likely provides structured and independent results for the participant’s work and training needs.⁷

Licensee obligations

A licensee who is responsible for Advisers has obligations to:

• develop and adopt a CPD policy for its Advisers 

CPD policy

A licensee’s CPD policy must:

• specify the licensee’s CPD year
• set out the licensee’s overall approach to its CPD obligations and the CPD obligations of its Advisers
• describe how the licensee will:
  • assess and approve CPD plans of its Advisers
  • monitor implementation of CPD plans of its Advisers
  • assess and approve CPD activities and attribute hours to them
  • ensure that at least 70 per cent of the hours counted by its Advisers are for licensee approved activities
  • check Adviser’s compliance with the policy and regulatory requirements
  • record and maintain evidence of completion of and outcomes of CPD activities
  • ensure records are completed and maintained; and
• be stored in a central location, such as a website, intranet or shared folder that is easily accessible by the licensee’s Advisers.⁸

• approve sufficient CPD activities to enable its Advisers to meet the requirement that 70 per cent of CPD hours is spent on licensee approved activities

Approval of CPD activities

• Licensees must not approve any CPD activities unless satisfied that it is a ‘qualifying CPD activity’. An activity is a ‘qualifying CPD activity’ where the following requirements are satisfied:
• the activity is in one of the CPD categories outlined above (technical competence, client care and practice, regulatory compliance and consumer protection, professionalism and ethics, tax (financial) advice or general)
• the activity has sufficient intellectual or practical content
• the activity is designed to enhance relevant providers’ knowledge and skills in areas that are relevant to the provision of financial product advice and financial advice services.

• when approving a CPD activity, determine the number of hours that can be counted for completing the activity
• monitor its employed Advisers’ implementation of their CPD plans
• make appropriate resources available to enable Adviser compliance, monitor its Adviser’s implementation of CPD plans and check compliance with the CPD policy.

Implications of non-compliance

Licensees are required to notify ASIC of any Advisers that do not complete the required CPD by the end of the licensee’s CPD year. Non-compliance will be shown on the ASIC Financial Adviser Register (FAR).

It is important to note that CPD non-compliance will need to be reported and published regardless of the circumstances that lead to the non-compliance. No materiality test applies.

Advisers should ensure they are on track to meet their CPD requirements well in advance of the end of the CPD year to mitigate the risk of non-compliance due to any unforeseen circumstances.

The legislative instrument for the Code of Ethics was registered on 11 February 2019.

The Code applies to all Advisers from 1 January 2020.

The values and standards comprising the Code of Ethics

Download the Values and Standards of the Code on a single printable page here.

The Code is underpinned by The Values.

The Values

You must always act in a way that demonstrates, realises and promotes the following values:

(a) trustworthiness

(b) competence

(c) honesty

(d) fairness

(e) diligence. 

These values are paramount. All the other provisions of this Code must be read and applied in a way that promotes the values.

The Standards

Ethical behaviour

Standard 1:

You must act in accordance with all applicable laws, including this Code, and not try to avoid or circumvent their intent.

Standard 2:

You must act with integrity and in the best interests of each of your clients.

Standard 3:

You must not advise, refer or act in any other manner where you have a conflict of interest or duty.

Client care

Standard 4:

You may act for a client only with the client’s free, prior and informed consent. If required in the case of an existing client, the consent should be obtained as soon as practicable after this Code commences.

Standard 5:

All advice and financial product recommendations that you give to a client must be in the best interests of the client and appropriate to the client’s individual circumstances.

You must be satisfied that the client understands your advice, and the benefits, costs and risks of the financial products that you recommend, and you must have reasonable grounds to be satisfied.

Standard 6:

You must take into account the broad effects arising from the client acting on your advice and actively consider the client’s broader, long-term interests and likely circumstances.

Quality process 

Standard 7:

The client must give free, prior and informed consent to all benefits you and your principal will receive in connection with acting for the client, including any fees for services that may be charged. If required in the case of an existing client, the consent should be obtained as soon as practicable after this Code commences.

Except where expressly permitted by the Corporations Act 2001, you may not receive any benefits, in connection with acting for a client, that derive from a third party other than your principal.

You must satisfy yourself that any fees and charges that the client must pay to you or your principal, and any benefits that you or your principal receive, in connection with acting for the client are fair and reasonable and represent value for money for the client.

Standard 8:

You must ensure that your records of clients, including former clients, are kept in a form that is complete and accurate.

Standard 9:

All advice you give, and all products you recommend, to a client must be offered in good faith and with competence and be neither misleading nor deceptive.

Professional commitment

Standard 10:

You must develop, maintain and apply a high level of relevant knowledge and skills.

Standard 11:

You must cooperate with ASIC and monitoring bodies in any investigation of a breach or potential breach of this Code.

Standard 12:

Individually and in cooperation with peers, you must uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public interest.

Guidance

The explanatory statement to the legislative instrument includes some examples and guidance on a number of the standards. Further guidance was released by FASEA in October 2019, December 2019 and October 2020. These guides provide over 30 examples to illustrate how the Code should be applied.

FASEA sought additional feedback in November 2021 regarding the wording of Standard 3 and possible amendment. Input from stakeholders on proposed amendment options was sought, but never resolved. With FASEA operations having ceased at the end of December 2021, it is now the Minister’s responsibility to interpret the responses received and address possible rewording of the Standard.

To date, no further changes have been made by the Minister, however, the Government has indicated its intention to review the Code of Ethics as part of their consultation with industry and consumer stakeholders, prior to issuing their final response on the Delivering Better Financial Outcomes package in late 2023⁹.

Enforcement of the Code of Ethics

Originally, compliance with the Code of Ethics was to be enforced by one or more industry governed Code Monitoring Bodies approved by ASIC.

However, in October 2019, the Government announced that it would fast-track the Hayne Royal Commission’s recommendation to establish a new disciplinary system and a single disciplinary body for financial advisers.

On 21 October 2021 the Better Advice Act was passed, expanding the operation of ASIC’s Financial Services and Credit Panel (FSCP) and winding up operations of FASEA. As a result, from 1 January 2022 the FSCP has been acting as the single disciplinary body for financial advisers. ASIC must refer certain conduct and circumstances to the FSCP, and the role and powers of the FSCP have been expanded to enable it to address a broader range of circumstances.