There has been some consternation in the advice community around the newly authorised advisers listed on ASIC's Financial Adviser Register (FAR) this year, given that new advisers must meet the new regulatory standards required from January 1 and the fact that the FASEA exam has only recently been set. Analysis of some new authorisations has also revealed some interesting results regarding qualifications.
To get clarity around this process and explain how there are nearly 20 new advisers listed, we need to understand exactly what new advisers must do prior to becoming a “qualified” authorised representative. New advisers who enter the profession from 1 January 2019 must:
- complete a FASEA Approved degree
- complete a Professional Year
- successfully pass the FASEA Exam
- Sign up to a Code of Ethics (The Code will apply to all Advisers - both new and existing, from 1 January 2020).
- Engage in ongoing PD
Some advisers have circumvented some or all these requirements through exemptions. At least one adviser who has been authorised this year was practicing overseas and was granted a “Foreign Adviser Exemption”. There are also small a number of foreign exchange traders newly listed. Other exemptions must also apply as 3 advisers have been listed as providing advice prior to 2019, although they have no listing on the FAR prior to this year. Our data analysis indicates that only one if the newly registered advisers this year actually meets FASEA’s educational standards in having a bachelor degree from the FASEA approved degree list.
Considering completion of an approved degree is one of the first requirements of the FASEA regime, this raises questions regarding ability of the public to use the FAR to validate authorised reps. Of course, there may have been an administrative error and the new advisers correct details are yet to be updated.
It has also been stated that advisers undertaking their professional year are eligible to be listed on ASIC Financial Adviser Register (FAR). During a New Entrant’s Professional Year and after they have completed a FASEA Approved degree and passed the Exam, they may be referred to as a Provisional Financial Adviser or a Provisional Financial Planner and listed on the FAR.
It is only after they have finished their professional year that a new entrant will be authorised to give financial advice to clients.
Unfortunately, there is nothing listed on the FAR regarding advisers being “Provisional” in status and given a number of new listings this year, prior to the exam being formalised, it would appear ASIC has given some leeway to the licensee’s and advisers involved. It is assumed ASIC has a mechanism to track when a provisional adviser’s professional year actually starts and when it will finish.
With the continued uncertainty around the processes involved in the listing and authorisation new advisers it is unclear how any member of the public could be sure that an adviser listed on the FAR is actually authorised to provide advice.
For consumers, the raison d’etre of the FAR is to provide clarity about the authenticity of an individual offering them financial advice. They’ve long been told if the person they're seeking advice from is not on the register, do not take the advice. Now it seems that potentially there are some people listed on the register who aren’t qualified to give advice as well.
There are two concerning parts to the ostensibly erroneous listings in the FAR, neither of them would an observer with confidence. The first is that some licensees still don’t know or realise what is required for new authorisations to be listed. The second is the possibility that ASIC are just uploading the information for public consumption and not checking its veracity. We’re not sure which would be of most concern! There is a need for clarity around this so that the FAR and it's listings maintain their integrity.
We’ll keep unpicking the processes in place around FASEA’s regulatory reform in an attempt to keep advisers up to date and informed regarding the latest developments as there is still a fair degree of confusion and uncertainly from many advisers and licensees that we’ve spoken to.