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Some better known ‘challenges’ the industry has faced…  Storm Financial  Opes Prime  CBA  NAB  Macquarie…  Westpac & ANZ have acknowledge ‘shortcomings’ Financial Planning Industry – A Challenging Past 2

 Regulatory Guide 146: Licensing: Training of financial product advisers  RG146 = Knowledge + Skills in ASIC Specialist Knowledge areas  Diploma of Financial Planning  Financial Planning (advice & skills)  Personal Insurance  Superannuation  Managed Investment, Securities (& Derivatives)  SMSF (optional extra)  Concerns - current RG 146 standards not commensurate to the level required to ensure appropriate technical and professional competence. Education & Training Standards (now) – RG146 3

Key Points:  Financial Systems Inquiry (FSI) & Parliamentary Joint Committee (PJC)  OUTCOME: “lift professional standards of Financial Advisers”. 3rd December 2015  DRAFT legislation released “Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015".  Consultation submissions closed on 4 th January  Let’s explore what this draft Legislation has to say! Financial Planning Industry – Inquiries & Reports 4

Proposed key AMENDMENTS (Financial ADVICE providers ONLY):  NEW education and training standards for Financial Advisers / Planners;  NEW independent Standard Setting body;  NEW Code of Ethics, monitored, enforced & reported;  RESTICTION on the use of the titles ‘financial adviser’ and ‘financial planner’;  Register of Financial Advisers: increase in amount of detail it will contain.  Transitional arrangements - EXISTING advisers (Letter of Authority on or before 30 th June 2017). (Proposed) Professional Standards of Financial Advisers 5

Corporations Amendment (Professional Standards of Financial Advisers)  Purpose: raise the education, training and ethical standards of financial advisers  Key changes:  Bachelor’s Degree,  Undertake a professional year (NEW Advisers only),  Pass a National exam,  Undertake continuous professional development (CPD) and  Comply with a Code of Ethics (Code).  NEW independent Standard Setting Body will ‘set the details’. Education & Training Standards – How it may be 6

Commence on 1 st July 2016  Who will be involved - Still to be determined  Responsibilities (setting rules from 1 st July 2016)  Determine the bridging course requirements for EXISTING adviser  Determine the degree or degree equivalent requirements (NEW Advisers),  Determine the professional year requirements ;  Determine the CPD requirements;  Approve the National Exam; &  Develop & approve the Code of Ethics. What is the Standards Body? 7

1 st July 2016  New Professional Standards of Financial Advisers legislation (commences)  New Standard Setting body – operational 1 st July 2017  New Education & Standards take effect (NEW Advisers)  Degree, National Exam, Professional Year  New CPD requirements come in to force  2 YEAR transition period (EXISTING Advisers) 1 st July 2019  Degree/Bridging Course & Exam pass (EXISTING Advisers)… no Professional Year requirement  Mandatory Code of Ethics enforcement (ALL Advisers)  Register of Financial Advisers updated to include all information (incl breaches) Important Dates 8

 NEW means did not hold Letter of Authority on or before 30 th June 2017  Preconditions to be Financial Adviser/Planner (approved by Standards Body)  HOLD a Degree or Degree Equivalent qualification  Undertake a Professional Year  Pass an National exam  Individuals can call themselves a ‘Financial Adviser’ or ‘Financial Planner’ – their choice.  Professional Year  no details yet; uncertain if can act as ‘Financial Adviser/Planner’ Education & Training Standards – NEW Advisers 9

 Continuing Standards as a Financial Adviser/Planner  Undertake Continuing Professional Development (CPD) set by the Standards Body (1 st July 2017)  Comply with Code of Ethics set by the Standards Body, covered by a monitoring Body and enforcement scheme (1 st July 2019)  Career Tip… become an “Existing Adviser”  Become an Authorised Representative on or before 30th June 2017  Entry point is still RG146 – Advanced Diploma required by Industry.  Lower hurdles going forward & 2 year transition period. Education & Training Standards – NEW Advisers 10

 EXISTING Adviser means held Letter of Authority on or before 30 th June  2 year Transition period (ends 1 st July 2019)  Complete an appropriate bridging course or courses (approved by the Standards Body) to raise their qualifications to a bachelor degree level, or equivalent qualification  Pass an National exam (multiple attempts permitted over 2 year transition period). Failed attempts not shown on Register of Advisers.  National Exam & Bridging courses approved by the body will be available from 1 July  NOT required to undertake a Professional Year. Education & Training Standards – EXISTING Advisers 11

 What happens if an ‘Existing Adviser’ fails to meet the 1st July 2019 deadline?  Person will cease (with immediate effect) to be Financial Adviser/Planner.  If person wants to remain Financial Adviser / Planner they must meet the ‘new Adviser’ rules: o HOLD a Degree or Degree Equivalent qualification o Undertake a Professional Year o Pass an National exam. Education & Training Standards – EXISTING Advisers 12

 Continuing Standards as a Financial Adviser/Planner  Undertake Continuing Professional Development (CPD) set by the Standards Body (1 st July 2017)  Comply with Code of Ethics set by the Standards Body, covered by a monitoring Body and enforcement scheme (1 st July 2019)  Career Tip…  Complete Diploma / Advanced Diploma of Financial Planning (before 30 th June 2017)  May reduce ‘bridging course’ requirements – prior quals taken in to account  Complete the Bridging Course & Exam prior to 30 th June 2019 Education & Training Standards – EXISTING Advisers 13

Existing Advisers as at 1 st July 2017 – hold Diploma of Financial Planning.  Three (3) Financial Advisers all hold the DFP - John, Laura and Mitch.  John, Laura and Mitch can continue to give financial advice on relevant financial products to retail clients until 1 July 2019 (transition rules).  If John, Laura and Mitch wish to continue to give advice after 1 July 2019, they will need to complete the necessary bridging requirements determined by the body and pass the exam. They do not need to undertake a professional year.  John wants to remain in the industry post 1 July He sits the exam and passes. He also completes a bridging course approved by the body which increases his education level to a degree equivalent. John’s licensee advises ASIC that he has passed the exam and completed the bridging course. ASIC updates the Register. John can continue to give personal advice to retail clients on relevant financial products after 1July  Laura plans to retire soon. Laura does not sit the exam or complete a bridging course. On 1 July 2019, Laura retires and the Register is updated to indicate that Laura is no longer authorised to give personal advice to retail clients on relevant financial products.  Mitch wants to remain in the industry. He completes a bridging course but he does not pass the exam. After 1 July 2019, he cannot give personal advice to retail clients on relevant financial products. Mitch chooses to remain in the industry and only gives advice on basic banking products, general insurance products and consumer credit insurance (Tier 2 advice). EXISTING Adviser ‘Scenario’ 14

Existing Advisers as at 1 st July 2017 – Degree qualified.  Hamish is an existing financial adviser with a relevant degree.  Hamish wants to continue to give personal advice on relevant financial products to retail clients after 1 July  Hamish sits the exam in December 2018 but does not pass.  His failed attempt to pass the exam is not displayed on the Adviser Register.  Hamish reattempts the exam in March 2019 and passes. His licensee advises ASIC.  Hamish may now continue to give personal advice to retail clients on relevant financial products after 1 July  Hamish has 1) passed exam & 2) has a Degree… no Professional Year required. EXISTING Adviser ‘Scenario’ 15

Recap - Key Dates & Changes 16

Slides  Other useful information page  Industry responses to proposed legislation o FPA o AFA o CPA  Proposed Draft Legislation Further information 17

 Joel Ronchi  Managing Director -   Caoimhe (pronounced ‘Queeva’) Doody  RG146 Course Consultant -  Integrity Education – RG146 Specialists 18