If you are an Australian financial services (‘AFS’) licensee (or for that matter an authorised representative, employee or director of an AFS licensee) (‘Relevant Persons’) you may want to consider making compliance with the new financial services laws requirements your new year’s resolution!
The Relevant Persons of AFS licensees who provide personal advice to retail clients in relation to all financial products other than basic banking products, general insurance products or consumer credit insurance (‘Relevant Services’) will need to comply with the following new education requirements as part of their license:
- Hold a bachelor or higher degree approved by the Financial Adviser Standards and Ethics Authority (‘FASEA’);
- Pass an exam;
- Meet CPD requirements set by FASEA each year;
- Complete a year of work and training (new licensees from 1 January 2019 only); and
- Comply with a code of ethics set by FASEA and be covered by an ASIC approved compliance scheme that monitors and enforces compliance with the code of ethics.
When does this apply to me?
Well, it depends on whether you are an existing AFS licensee (i.e. a person who is a provider of Relevant Services at any time between 1 January 2016 and 1 January 2019) (‘Existing AFS Licensee’) or will become an AFS licensee after 1 January 2019 (‘New AFS Licensee’).
The release of the new obligations will be staggered and it is important as an AFS licensee that you are compliant with the applicable timeframes set out below.
|Requirement||New AFS Licensee||Existing AFS Licensee|
|Have a relevant bachelor or higher degree, or equivalent qualification||1 January 2019||1 January 2024|
|Pass the exam||1 January 2019||1 January 2021|
|Complete a professional year||1 January 2019||Not applicable|
|Comply with CPD requirements||1 January 2019||1 January 2019|
|Comply with the code of ethics||1 January 2020||1 January 2020|
|Be covered by a compliance scheme||1 January 2020||1 January 2020|
A final point to note is that the changes will mean that diploma level studies will no longer be recognised towards becoming a financial adviser.
To ensure that you are compliant with the incoming laws and don’t get any shocks in the new year, contact Michael Garry from our office.