Government phases in stricter financial planner requirements

The Australian financial planning industry is looking down the barrel of stricter education and ethics requirements.

The Australian Securities and Investments Commission (ASIC) looked at the quality of advice provided by five of Australia's largest banking and financial services.

The report found that 75 per cent of advice given was non–compliant. In 10 per cent of these cases there were significant concerns about the impact of the advice on the customer's financial situation.

Non-compliant advice refers to personal advice provided by an adviser who has not considered their clients best interests by considering the customer's existing financial products and the customer's circumstances.

The new educational and ethics requirements take aim at these practices.

There will be a phased approach to implementation of the requirements over a twelve month period starting 1 January 2019.

The new requirements say that financial advisors must have a relevant higher education degree or equivalent qualification, complete an exam, complete a professional year, meet continuing professional development requirements every year and comply with a code of ethics. Monitoring bodies will operate compliance schemes to monitor and enforce compliance with the code of ethics.

This is in stark contrast to current practice, where financial advisers are only required to hold an equivalent of a Certificate III or Diploma, which could be completed through a short three day training course.

In addition, the online financial advisers register will be updated to include details of any non-compliance by a financial services provider.