After a series of scandals rocked the financial advice industry—including the provision of inappropriate advice and the charging of fees for no service—new professional standards have been established to improve the quality and transparency of advice services in Australia.

Lifting professional standards for advice

Commencing on 1 January 2019, these standards apply to new entrants and heighten the education and conduct requirements for those providing personal advice. Existing advisers have until 1 January 2026 to fully comply with these requirements and meet the standard.

The Financial Adviser Standards and Ethics Authority (FASEA) was established by the Federal Government in April 2017 through the Corporations Amendment (Professional Standards of Financial Advisers) Act 2017, to set the education, training and ethical standards of licensed financial advisers in Australia.

Who is impacted by the reforms?

Not all advice providers fall under the new requirements. Importantly, those providing only general advice are excluded and the training requirements of RG146 continue to apply to individuals who provide only general advice. ASIC will review and update these requirements separately.

The reforms however do apply to new or existing advisers giving financial advice on Tier 1 financial products (explained below) to retail clients. That is, a personal advice provider, who is:

  • an Australian Financial Services (AFS) licensee, or
  • an authorised representative, employee or director of an AFS licensee,


  • authorised to provide personal advice to retail clients in relation to financial products other than basic banking products, general insurance products, consumer credit insurance or any combination of these products.

These individuals are called ‘relevant providers’.

What is a Tier 1 product?

Tier 1 All financial products except those under Tier 2
Tier 2
  • General insurance products except for personal sickness and accident (as defined in reg 7.1.14)
    Note: Travel insurance products are included in Tier 2, even where the product covers losses arising due to sickness or accident while travelling
  • Consumer credit insurance (as defined in reg 7.1.15)
    Note: Consumer credit insurance products are included in Tier 2, even where the product covers consumer credit liabilities that cannot be paid to to sickness or accident
  • Basic deposit products
  • Non-cash payment products
  • FHSA deposit accounts
    Note: First Home Saver Account (FHSA) deposit accounts are FHSAs issued by an ADI. Other types of FHSAs are Tier 1 products: see RG 146.45 – RG 146.46

Understanding the types of advice

Personal advice General advice
Financial product advice that is given or directed to a person (including by electronic means) where:

  1. the provider of the advice has considered one or more of the person’s objectives, financial situation and needs; or
  2. a reasonable person might expect the provider to have considered one or more of those matters
Financial product advice that is not personal advice. General advice is also a statement of opinion but it does not take into account the client’s objectives, financial situation or needs.

The new professional standards obligations

The new professional standards obligations mean that the terms ‘financial adviser’, ‘financial planner’ or similar may only be used by providers who:

  • have a relevant bachelor or higher degree, or equivalent qualification
  • pass the Financial Adviser Exam
  • meet continuing professional development (CPD) requirements each year
  • complete a year of work and training (professional year) – note this does not apply for individuals who were already relevant providers before 1 January 2019
  • comply with a code of ethics and be covered by a compliance scheme that monitors and enforces compliance with the code of ethics.

Education requirements

New entrants to the industry will need to complete a relevant bachelor degree or higher level qualification.

Existing advisers must ultimately achieve at least the same level of qualification, but some credit for courses already completed is available, for example an Advanced Diploma of Financial Planning can be used for two subjects’ credit towards a graduate diploma.


Both new entrant and existing advisers must complete an exam to represent a common benchmark across the industry. The exam tests the practical application of adviser’s knowledge in three key competency areas:

  1. Financial Advice Regulatory and Legal requirements (including Corporations Act chapter 7, AML, Privacy and Tax Agents Services Act (TASA) 2009
  2. Financial Advice Construction – suitability of advice aligned to different consumer groups, incorporating consumer behaviour and decision making
  3. Applied ethical and professional reasoning and communication – incorporating FASEA Code of Ethics and Code Monitoring Bodies

FASEA reports that nearly 600 advisers sat the exam in June 2019.

Continuing Professional Development (CPD)

FASEA have made the legislative instrument Corporations (Relevant Providers Continuing Professional Development Standard) Determination 2018 to establish CPD requirements.

Under this determination financial advisers are required to complete 40 hours of CPD each year of which 70 per cent must be approved by their licensee (including a maximum 4 hours of professional reading). The minimum hours for CPD across the mandatory categories are:

  • Technical – 5 hours
  • Client care and practice – 5 hours
  • Regulatory Compliance and Consumer Protection – 9 hours
  • Professionalism and Ethics – 9 hours

The remainder of the 40 hours can consist of any qualifying CPD.

Professional year

All new industry entrants must complete a professional year before they are qualified as a financial adviser. The year is defined as one-year full time made up to 1600 hours of work, of which 100 hours must be structured training.

Code of ethics and compliance monitoring

Advisers are required to comply with a code of ethics (a set of 12 standards covering ethical behaviour, client care, quality process and professional commitment) and the core values of trustworthiness, competence, honesty, fairness and diligence.

The code is to be monitored and enforced under a compliance scheme approved and supervised by ASIC.


Although the new professional standards commenced from 1 January 2019, transitional arrangements apply for existing advisers who were ‘relevant providers’ at any time between 1 January 2016 and 1 January 2019 and were not prohibited from providing advice on 1 January 2019.

If an adviser fails to meet a deadline, they must cease to use the terms ‘financial planner’ or ‘financial adviser’ and will no longer be a ‘relevant provider’.

On 30 August, Senator the Hon Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology, announced the new time frame giving advisers two additional years to obtain relevant qualifications and one additional year to pass the exam – as shown below.  (Please note this was updated since the original SuperCPD article.)

Requirement Application date
Have a relevant bachelor or higher degree, or equivalent qualification 1 January 2026
Pass the exam 1 January 2022
Comply with CPD requirements 1 January 2019

Information for this article was largely sourced from the ‘Financial Advice Reform’ article written by Kate Crawford in the current issue of Super CPD. For more information about Continuing Professional Development or subscribing to Super CPD, visit the ASFA website.