Overview

The Corporations (Provisional Relevant Providers—Expressions) Determination 2018, enacted by the Financial Adviser Standards and Ethics Authority Ltd, aims to address the gap in the Corporations Act 2001 by providing provisional relevant providers with the ability to use specific expressions that reflect their supervised status. This determination was introduced to ensure transparency and clarity in the financial services industry, allowing provisional financial planners and advisers to use terms such as "provisional financial planner" and "provisional financial adviser" while they are under supervision. The determination, which took effect the day after its registration in the Federal Register of Legislation, was made under the legislative authority of subparagraph 921U(2)(a)(v) of the Corporations Act 2001 and follows consultations with stakeholders. The Authority deemed the determination compatible with human rights, given its role in enhancing service standards and consumer confidence in the industry.

Scope and Application

The Corporations (Provisional Relevant Providers—Expressions) Determination 2018 applies to provisional relevant providers as defined under section 910A of the Corporations Act 2001, regulating their use of certain professional titles in the financial services industry. This determination, which comes into effect the day after its registration in the Federal Register of Legislation, allows provisional relevant providers to lawfully use the terms "provisional financial planner" or "provisional financial adviser" while they are under supervision. The Authority undertook consultations with stakeholders, receiving feedback which was considered before finalising the determination. This instrument is part of a broader legislative framework aimed at raising the educational, training, and ethical standards of financial advisers to ensure better service standards and greater consumer confidence in the industry. While it may engage certain human rights, such as the right to freely choose and accept work, it is deemed compatible with the human rights and freedoms recognised in international instruments.

Key Provisions

The main operative sections of this determination (Corporations (Provisional Relevant Providers—Expressions) Determination 2018) are found in sections 2 and 4. Section 2 specifies the commencement date of the determination, which is the day after it is registered in the Federal Register of Legislation. Section 4 then specifies the expressions that provisional relevant providers are permitted to use, namely "provisional financial planner" and "provisional financial adviser". These sections work together to provide clarity on when the determination becomes effective and what terminology provisional relevant providers are allowed to use during their period of provisional status. The obligations and requirements imposed by this Act on provisional relevant providers are primarily focused on the use of appropriate titles to maintain transparency and clarity in their professional status. Under section 923C of the Corporations Act 2001, provisional relevant providers are prohibited from using the expressions "financial planner" or "financial adviser" (or terms of like import). Instead, they must use "provisional financial planner" or "provisional financial adviser" to accurately reflect their supervised status. This requirement ensures that clients are fully informed about the provider's qualifications and the nature of their professional oversight. Additionally, under subsection 923C(9), provisional relevant providers may use the expressions "financial planner" or "financial adviser" if these terms are determined by the Financial Adviser Standards and Ethics Authority Ltd, as outlined in section 4 of this determination. The determination outlines specific offences, penalties, and consequences for non-compliance with its provisions. While the determination itself does not specify penalties for breaches, the overarching framework under the Corporations Act 2001 applies. Under section 1317E of the Corporations Act, a person who contravenes a provision of the Act, such as the improper use of professional titles, may be subject to civil penalty provisions. The maximum penalty for such an offence is $210,000 for individuals and $1,050,000 for bodies corporate. Additionally, the improper use of professional titles can lead to criminal charges, where the maximum penalty is 5 years imprisonment for individuals and fines up to $5.25 million for bodies corporate. These penalties underscore the importance of adhering to the determined expressions to maintain professional integrity and consumer confidence in the financial services industry.