The government just released its response to the Financial System Inquiry, and it has taken a big swipe at the standard of financial advisers in Australia.
Under the adopted recommendation laid out by former CBA boss David Murray, financial advisers will now need to do five things to operate in Australia.
These include: have the right degree, complete a professional year, pass an exam, undertake continuous professional development, and subscribe to a code of ethics before they can advise clients.
Assistant treasurer Kelly O’Dwyer said the new requirements were part of raising the professional, ethical and education standards in the financial services sector, bringing it in line with other industries.
“These higher standards will, for the first time, place financial advising on a similar footing to other professions and in doing so increase consumer trust and confidence in the sector,” the government said.
The new measures, which will be set by an independent, industry funded body, are expected to be introduced by mid-2016.
Also outlined in the response are new restrictions around the use of the titles “financial adviser” and “financial planner”.
“The recently established register of financial advisers will be amended to clearly identify whether individuals meet the new standards and whether there are relevant bans, disqualifications or code breaches applicable to that individual,” it reads.
“We will also restrict use of the term ‘financial adviser’ and ‘financial planner’ to those listed on the register.”
It will also rename “general advice” to improve consumer understanding.
“We will consult with a wide range of stakeholders and conduct consumer testing before finalising the new term,” the government says.
“We will also develop legislative amendments to ensure that financial advisers and mortgage brokers adequately disclose their relationships with associated entities.”
The government will be hosting a roundtable with “key stakeholders” to discuss implementation, and there’ll be a statutory review of the regulatory framework in 2019.
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