Advisers told to take urgent action as exam cut off looms

The law firm explained that pursuant to the FASEA rules, financial advisers are grouped into two separate categories including new entrants and existing advisers.

Existing advisers are financial advisers that were authorised to provide personal financial advice to retail clients at any time between 1 January 2016 and 1 January 2019 and have not not subject to a banning order or similar.

New entrants on the other hand, are individuals who have entered 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,” the article noted.

Following the passage of the Better Advice bill, existing advisers were given a nine month extension to successfully complete the exam, effectively pushing the cut off date back to 1 October 2022.

With only 328 of the 628 advisers participating in the latest exam sittings actually passing, the law firm said there are a number of existing advisers who have not met this extended deadline.

“As a result, some advisers were facing an uncertain future whereby they might lose their status as an existing adviser,” it said.

“If this were the case, they would only be permitted to re-join the profession as a New Entrant.”

Hamilton Locke said this would clearly be an unfavourable outcome as it would require an experienced financial adviser to undertake a supervised professional year and they would lose the benefit of having the extended time period to satisfy the FASEA education requirements.

However, the law firm said that after closely considering the relevant legislation and ASIC guidance in depth, it has determined that there may be a solution for existing advisers who have not passed the exam and want to avoid being reclassified as a new entrant.

The law firm said by removing themselves from the Financial Advisers Register on or before 30 September 2022, existing advisers will be able to 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,” the article explained.

“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 exam and fails to remove themselves from the FAR on or before 30 September will be removed from the register by ASIC and will be reclassified as a new entrant, the law firm warned.

“Any such adviser will be required to complete a supervised professional year and satisfy the education requirements before returning to the profession,” it said.

Hamilton Locke said ASIC has confirmed its this position in its “Financial Advisers Quick Reference Guide”.

The law firm said this may be a 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,” it said.