The Australian Securities and Investments Commission (ASIC) yesterday released Consultation Paper 212 (CP212) which proposes to introduce ‘Regime B’ from 1 January 2015 and ‘Regime C’ from 1 January 2019.
Regime B will apply to advisers who start providing financial product advice between 1 January 2015 and 1 January 2019, with Regime C to apply to new advisers or those who change specialisations from 1 January 2019 onwards.
Financial Planning Association general manager of policy and government relations Dante De Gori said there is a question over what the impact will be, if any, on existing advisers and how it will impact those who change specialisations after the regime commences.
According to ASIC, the new regimes will increase generic knowledge requirements, introduce specialist knowledge requirements for financial planning, securities and superannuation, increase skill requirements for personal advice, and raise educational level requirements.
The regulator said there is a need to raise the educational level of advisers providing personal advice on Tier 1 products. The requirement will increase from the current AQF Level 5 (equivalent to a Diploma) to AQF Level 6 (equivalent to an Advanced Diploma) under Regime B and to AQF Level 7 (equivalent to a Bachelor’s Degree) under Regime C.
‘Tier 1 products’ refers to all financial products outside of Tier 2, which includes general insurance products (except for personal sickness and accident), consumer credit insurance, basic deposit products, non-cash payment products and first home saver deposit accounts.
However, if a national exam such as that outlined in ASIC’s CP153 consultation paper is implemented, this may negate the need for the obligation to do a training course approved in writing for advisers of Tier 1 products, ASIC stated.
ASIC is proposing to make all generic knowledge requirements for Tier 1 advisers mandatory. Under RG146 Tier 2 products are deemed to be simpler and better understood and therefore subject to lighter training standards and a lower educational level.
ASIC’s previous CP153 consultation proposed a number of improvements, including a national exam and knowledge update review.
Mr De Gori told InvestorDaily the impacts of CP153 are just one of the details that will need to be worked through in the consultation process.
“We’ll need to review closely how this works in practice … the new regimes, how they apply to new people joining as well as existing advisers and changes in their specialisation,” he said.
“The other point we’ve been talking about is how this will all interact and streamline with requirements under Tax Agent Services Act (TASA) changes.”
While the timeframes appeared reasonable, there is also a question over how the educators will be able to implement changes, particularly into degree structures, Mr De Gori said.
“The red flags are for us [are] if there’s enough time for [universities] to be able to produce what’s required under RG 146 for new students… the implications for existing planners and how they navigate through these regimes, and the practical implications of interacting and intersecting with the TASA regime,” he said.
Those are not unworkable but will need to be addressed along with the implications of CP153, he added.
“The key point is the integrity of the entrance requirements to the industry need to be maintained. If you’re increasing standards and education requirements then you need to make sure that’s upheld in all cases.”
ASIC’s consultation paper can be viewed here.
