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Financial Planners Must Now Plan Ahead

In response to the criticism of the Australian financial services industry in recent years, from 1 January 2019 there are now additional hurdles to become, and remain, a financial adviser or planner. Financial planners or advisers, or those wanting to become one, must now comply with these new requirements: serious consequences follow if they don?t meet the requirements and still hold themselves out as 'financial planners'. Jessica Leppert, Maddocks Lawyers

What changed and does it apply to me?

The Corporations Amendment (Professional Standards of Financial Advisers) Act 2017 (Cth) introduced key amendments to the Corporations Act 2001 (Cth) (Act) which apply to new and existing 'relevant providers' from 1 January 2019, unless the Act authorises you for an extension of time.

You are affected by the changes if you are a relevant provider.

A relevant provider[1] is a person who is:

  • a financial services licensee; or
  • an authorised representative of a financial services licensee; or
  • an employee or director of a financial services licensee; or
  • an employee or director of a related body corporate of a financial services licensee; and

who is authorised to provide personal advice to retail clients, as the licensee or on behalf of the licensee, in relation to relevant financial products. These providers typically call themselves 'financial advisers' and 'financial planners'.

What are the new changes?

The Act now requires that from 1 January 2019, new relevant providers must:

  1. hold a Bachelors degree or higher;
  2. pass an exam set by the standards body, the Financial Adviser Standards and Ethics Authority (FASEA); and
  3. undertake at least one year of work and training (referred to as 'the professional year').

In addition, all new and existing relevant providers must:

  1. comply with the continuing professional development requirements each year;
  2. comply with the Code of Ethics set by the FASEA; and
  3. be covered by a compliance scheme.

Can I get an extension of time to comply?

You have extra time to conform with these changes if you are an existing provider. An existing provider includes someone who is a relevant provider between 1 January 2016 and 1 January 2019 and has not been banned, disqualified or suspended during this time.

The ASIC website details the timeline of when new and existing Financial Advisers have to comply with these changes.[2]

Why do these changes matter?

Unless you are a relevant provider, you cannot:

  • provide a financial service to a retail client; and
  • use the words 'Financial Adviser' or 'Financial Planner' (or similar) when providing a financial service to a retail client.[3]

In each case it is an offence to do this.

More information from Maddocks

For more information, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Commercial team.

[1] Section 901A of the Act.

[2] See: https://asic.gov.au/regulatory-resources/financial-services/professional-standards-for-financial-advisers-reforms/

[3] See Section 923C of the Act.

 

Lawyer in Profile

Paul Ellis
Paul Ellis
Special Counsel
PH: 61 3 9258 3524

Paul is a Special Counsel in the Maddocks Commercial team with particular expertise in commercial agreements for the supply of goods and/or services, the Personal Property Securities Act 2009, the National Consumer Credit Protection Act 2009 and the National Credit Code and the Australian Consumer Law.

Paul's key areas of practice include:

  • Australian Consumer Law;
  • credit and securities law;
  • commercial law and contracting;
  • government contracts; and
  • trust and superannuation law.

Before joining Maddocks, Paul was employed for 13 years with the Victorian Department of Justice, principally as a Deputy Registrar in the Victorian Magistrate's Court, but also as a legislation, policy and project officer for the Department.