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Australia: contrasting competence requirements proposed

In Australia, RiskInfo reports that existing financial advisers will be required to a hold a degree equivalent qualification by 1 January, 2024 if they wish to continue to practice, according to new proposals released by the Financial Adviser Standards and Ethics Authority (FASEA).

In the proposals which have been released for consultation, advisers would be able to continue practicing from the start of 2024 if they:

  • hold a qualification that is on the FASEA approved register;
  • have completed an Australian Quality Framework level 7 (AQF), or bachelor degree level, qualification that is on the FASEA approved register;
  • have completed a course that offers at least 8 units at AQF level 8, or post-graduate level, covering fields that include ethics, professional attitudes and behavioursfinancial planning and advice processes, and technical requirements.

To give an example of the scale of work required, eight units at AQF level 8 requires about two years study part-time. 

While I am a fan of the view that competence needs to be considered within the framework of the financial advice business offering the service (because competence requirements vary, depending on scope of service, and degree of automation), the run of play is to increase the broad base level of competence requirements wherever someone wishes to hold themselves out as a financial adviser - whatever their actual scope of services offered. That approach is justified because even if scope is narrowed for an engagement, a consumer talking to someone labelled a 'financial adviser' may reasonably expect that the adviser has the breadth of experience necessary to place the service offered in context for them.

Companies that wish to offer much narrower services, using staff that are not qualified as financial advisers, but a more just 'process helpers', or salespeople, may be free from these requirements. But consumers may be confused if they could be called financial advisers.

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