Financial planners granted more time to take and pass exams

The financial planning industry has been granted more time to meet tougher professional standards and qualifications.

The Association of Financial Advisers on Wednesday welcomed the timetable extensions.

The battered financial planning industry was granted a reprieve on Wednesday that gives it more time to meet tougher professional standards and qualifications, following scrutiny of the sector at the Hayne royal commission.

Legislation was passed in federal parliament that gives existing planners extra time to meet qualification and examination requirements set by the Financial Adviser Standards and Ethics Authority.

The law mandates that existing advisers complete the FASEA exam by January 1, 2022, reflecting a one-year extension, while they have an extra two years to meet qualification requirements now due by January 2026.

These changes do not apply to new advisers registered after January last year. The new FASEA requirements were put in place to help rebuild consumer trust in the battered financial planning industry, which has been caught up in a number of scandals in the past five years.

The industry received breathing space on the professional standards when the legislation overcame a hurdle posed by a ­proposed amendment by South Australian senator Rex Patrick. The barrier was removed when the amendment was withdrawn.

Jane Hume, assistant minister for superannuation and finan­cial services, said the new time­table gave “welcome relief” and certainty to financial advisers.

“The government recognises how valuable access to quality professional financial advice is, particularly at the moment duri­ng the COVID-19 crisis,” she said.

The timetable follows a report by Adviser Ratings last month showing just 7488 advisers had done the exam, with 1080 failing.

The first round of exams were held last year, and three further sittings have occurred. The 7488 candidates to sit the exam represent 32 per cent of advisers on the corporate regulator’s registry.

The Association of Financial Advisers on Wednesday welcomed the timetable extensions.

“It will allow advisers to continue to focus on the immediate needs of their clients … facing the economic impact of COVID-19,” AFA boss Philip Kewin said.

The industry body for self-managed superannuation funds also applauded the legislation.

“It illustrates all sides of parliament recognise that the industry needs more time to adjust to the FASEA reforms while remaining on the path towards improved ­financial advice standards,” SMSF chief executive John Maroney said.