On Friday evening, the Financial Adviser Standards and Ethics Authority (FASEA) released two legislative instruments. The instruments provide further information about the new and ongoing requirements for those providing advice under the federal government’s new education requirements.
The new education requirements fully come into effect in 2024. To qualify for transitional concessions, advisers need to have been on ASIC’s financial adviser register between 2016 and 2018, making December this year the final deadline.
Key changes include the ongoing annual CPD requirements, which have been reduced from 50 hours to 40 hours.
Ethics course requirements have also dropped from 10 hours to nine hours. However, this is still twice the number of hours that is required for most technical and regulatory subjects on an annual basis, which is “excessive,” according to Licensing for Accountants chief executive Kath Bowler.
Although the new framework is more lenient, the ongoing education requirements are still concerning for accountants.
Ms Bowler estimates that between holding a professional designation and meeting FASEA’s requirements, accountants providing advice will need to complete 60 hours of CPD annually. In some cases, this is more than what a doctor is required to complete.
“This does not recognise that accountants are not changing careers. They are adding to an existing accounting career. It’s not the 40 hours per se that is the issue, it’s the way it adds up with all the other roles,” Ms Bowler said.
Exam relaxes – slightly
By 2021, existing advisers will have to sit an exam to meet the new education requirements. The conditions of this exam have been slightly eased. It’s now 3.5 hours instead of four, and has allowances for open book for statutory materials.
The SMSF Association said the changes are an improvement, but still “arduous” for existing advisers.
“It’s as long as any university exam, and many who will be sitting it wouldn’t have sat an exam for a long time,” said head of policy at the SMSF Association, Jordan George.
Limited versus full AFSL
The latest round of guidance still does not distinguish between an accountant holding a limited versus a full AFSL. In effect, this means an accountant holding a limited AFSL will be completing training and education they won’t be using in practice.
For the SMSF Association, this is a paramount concern for members, and for the population of the SMSF adviser market. Already, about 60 per cent of Chartered Accountants have indicated they will leave the advice market if the new rules are brought into effect as they are.
“This has been a concern of the SMSF Association. Basically, the education load required under FASEA exceeds the type of advice an accountant can actually provide under a limited licence,” Mr George said.
More to come.