As most financial planners in the industry would be aware, all financial advisers are required to have passed the FASEA exam on or before 30 September 2022.
Pursuant to the FASEA rules, financial advisers are grouped into two (2) separate categories:
- “New Entrants”; and
- “Existing Advisers”.
“Existing Advisers” are financial advisers that were authorised to provided personal financial advice to retail clients at any time between 1 January 2016 and 1 January 2019 (and who are not subject to a banning order or similar).
A “New Entrant” is an individual who enters the profession and does not qualify as an Existing Adviser, generally because they commenced their career after 1 January 2019. Before being authorised to provide personal advice to retail clients, a New Entrant must:
- Complete a FASEA approved degree;
- Complete a supervised professional year; and
- Pass the FASEA exam.
Existing Advisers, on the other hand, are not required to complete a supervised professional year and have until 1 January 2026 to comply with the FASEA education requirements.
Existing Advisers were originally required to have passed the FASEA Exam on or before 1 January 2022. However, the Financial Sector Reform Amendment (Hayne Royal Commission Response – Better Advice) Regulations 2021 provided Existing Advisers who had twice unsuccessfully sat for the FASEA exam before 1 January 2022 with a nine (9) month extension, effectively pushing the cut-off date back to 1 October 2022.
There are a number of Existing Advisers who, unfortunately, have not been successful in passing the FASEA Exam before the extended deadline of 1 October 2022. As a result, some advisers were facing an uncertain future whereby they might lose their status as an Existing Adviser. If this were the case, they would only be permitted to re-join the profession as a New Entrant. Clearly, this would be an unfavourable outcome because:
- It would require an experienced financial adviser to undertake a supervised professional year; and
- The adviser would lose the benefit of the extended time period to satisfy the FASEA education requirements.
Fortunately, having considered the relevant legislation and ASIC guidance in depth, we have determined there is a solution for Existing Advisers who have not yet passed the FASEA exam and do not want to be reclassified as a New Entrant:
- Remove yourself from the Financial Advisers Register (FAR) on or before 30 September 2022! (see here):
If an Existing Adviser (who twice unsuccessfully sat for the FASEA exam before 1 January 2022) removes themselves from the FAR on or before 30 September 2022, they will retain their Existing Adviser status. This means that, once they eventually pass the FASEA exam, they can return to the profession in a matter of days. Of course, the adviser will not be permitted to provide personal advice to retail clients during the period from 1 October 2022 to the date the adviser receives confirmation that they have passed the FASEA exam.”
An Existing Adviser who has not passed the FASEA exam and fails to remove themselves from the FAR on or before 30 September 2022 will be removed from the register by ASIC and will be reclassified as a New Entrant. Any such adviser will be required to complete a supervised professional year and satisfy the education requirements before returning to the profession.
ASIC has confirmed this position in its “Financial Advisers Quick Reference Guide” (found here).
This is some consolation for Existing Advisers who have not passed the FASEA exam and are concerned about their future. It may require them to press “pause” on their career for a period, but it will allow them the time to prepare for the FASEA exam, pass the exam and then return to the profession. For some advisers, this may only be a matter of a few months.
How can we help?
If you are unsure about your obligations regarding the FASEA exam, we can provide you with advice on your situation and how the legislative regime applies to you.
Please contact either Simon Carrodus or Glenjon Aligiannis to discuss how we can help you.
