Why did government exclude sunset clause from experience pathway?
Experience pathway legislation introduced to the House of Representatives this week excludes a sunset clause, despite industry pushback.
Minister for Financial Services, Stephen Jones, introduced the Treasury Laws Amendment (2023 Measures No. 3) Bill 2023 to the House for a second reading on 14 June.
Schedule 2 of the bill amended the Corporations Act to deliver the government’s election commitment to better recognise the experience of existing financial advisers as equivalent to tertiary study.
It also addressed technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service to retail clients.
As of March 2023, there are 10,030 practising advisers who were first authorised in 2011 or earlier according to the Financial Advisers Register. However, the government acknowledged some of these may have already passed the education requirements and not require the pathway while others may have not been actively providing advice for the duration.
Approximately 2,086 advisers had indicated they are not intending to remain in the industry after 1 January 2026 if there was no experience pathway.
In his speech to the House, Jones stated: “Together, these amendments address practical implementation issues faced by financial advisers.
“By better recognising the experience of long-serving financial advisers, the government is providing a pathway for experienced advisers to remain in the industry. This means that new entrants have the benefit of their experience through mentoring, through supervision, and through employment. It also means that more Australians will have access to financial advice than would otherwise be the case.
“The government is committed to an advice industry with strong professional standards that give Australians access to high-quality financial advice and to do this by not creating unnecessary barriers to entry, ensuring financial advice remains a career of choice.”
However, he stopped short of introducing a sunset clause that had been widely called for by the industry.
During the consultation period that ran until 3 May, the Financial Advice Association of Australia (FAAA) chief executive, Sarah Abood, said: “We believe that this measure should be better targeted to older advisers, with the inclusion of a 10-year sunset clause.
“This would represent an appropriate transition for established, experienced financial advisers and planners with a clean compliance record. Otherwise, we will be in a position whereby planners currently in their 30s could continue to practise indefinitely with no further qualifications required.”
The explanatory memorandum for the bill stated: “Conditional support [of the pathway] was usually caveated with the desire to ensure the inclusion of a ‘sunset’ date to only allow the experienced pathway to be available until a set time in the future.
“The primary justification for this position was to ensure that advisers currently in their 30s and 40s, who qualify for the experienced adviser pathway, were precluded from being able to practise for decades without meeting any further education requirements. Upon analysis of the data, a sunset date is not considered necessary, and it would complicate the legislation.
“Data from the Financial [Advisers] Register shows that an estimated 5,800 advisers are in their late 40s or older and will form the majority of advisers eligible for the experienced pathway. The proposed sunset date was 15–20 years, when a majority of advisers would be retiring. There was a trade-off between including this additional limitation and the complexity it added to the system and legislation and any perceived protection it provided.”
Other than the contingent amendments in parts 5 and 6, the amendments in Schedule 2 to the bill commence on the day after royal assent.
AUTHOR
Laura Dew
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You lot can do whatever you want, I am leaving this thoroughly screwed up profession. Having done my masters in 2012 before anyone had a gun at my head, after doing all the BS ethical courses and FASEA exam, after 22 years of not having a single complaint, I am not hanging around to be screwed over any more by idiot politicians and self interested industry operatives. I wont be standing around to see Industry super funds and banks reinvent the wheel and lay the ground work for another Royal Commission. I am taking my money and the risk off the table.
nice
I'm glad I will be ready to retire from this profession in about 10 years. That's about how long it will take for the government of the day to realise that they have swung the pendulum way too far back the other way and the advice industry is back in ethical turmoil and bad advice is rampant. Maybe a little bit longer than 10 years, by the time they take 4-5 years to implement everything, but definitely within 15 years.
Vertical integration, non or under-qualified people giving advice, sales targets set by banks and super funds, leading to flogging products rather than giving advice. Then someone will wake up and say, "Oh maybe we shouldn't have completely unwound the Royal Commission. Lets have another one to try and see why there are all these problems".
It's a pity that politicians rarely listen to the people doing the job well to set the rules for how to do the job well. Apart from a few minor admin fixes, that will have virtually no impact on our business, the QAR looks like another opportunity missed. And it wasn't rocket science to get it right. Pretty disappointing really.
FAAA = Splinters. Sit on the fence, foot in both camps, not a true leader
for those amongst throwing their toys out of the sand pit - (and happy to confess I was one of them) the walk back on this contrived education process (hurdles) presents as a seriously good thing.( being educated was obviously necessary imperative to deliver advice - that's why the industry guy scan now do this totally without qualification - no even the holy ethics obligations. In my own case - single adviser practice - healthy business - I was required to do four full units at uni - (despite having other relevant degrees and post grad quals in project management and IT) it was going to be cost of study = 4 x units @ 3.5k each + one full years salary + payment of another advisor to look after the book - you know the usual things - so it was going to be a 220k + exercise for 4 units (one year) and I would have used the new requirements for about 3-5 years at best. not a good ROI - $220k investment to remain for 3 -5yrs. but this needs to be put into context. The total carve out for those of the ISN camp was always the main game. Make all the advice provision expensive - and then have our team providing advice - it essentially for free. What could be more equal than that? - or was it always about commercial imperative to nobble the IFA's and banks encroachment on the ISN honey pot. I think the question has been well and truly answered by the actions of Levy and her mates in the Labor ISN - cabal
Hey Sarah, i was looking for your comments about advisers in their 50's and 60's, the ones' where you are championing their value to the industry, acknowledgement for their experience and their overall importance as to the balance they provide this industry. Instead, you opted to support the sunset clause, disrespecting all of the advisers with CFP accreditation and Advanced Diploma status and totally disregarding the very purpose of CPD.
Your stand was to burn these guys and not one to assess and evaluate. You were comfortable to have me as part of the collateral damage.
FAAA its a NO from me.