Financial Adviser Standards and Ethics Authority Ltd
Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021
Explanatory Statement
Key information
- This instrument amends the Corporations (Relevant Providers Exams Standard) Determination 2019 to ensure that an adviser can sit the November 2021 exam even if the adviser has sat the exam within 3 months before the date of the November 2021 exam.
- Date of effect: the day after this instrument is registered in the Federal Register of Legislation (see section 2).
Glossary
3. Words and expressions used in this statement are defined in the following table.
Expression | Meaning |
Act | the Corporations Act 2001. |
Authority | Financial Adviser Standards and Ethics Authority Ltd, which is the standards body under section 921X of the Act. |
exam | an exam approved under the Corporations (Relevant Providers Exams Standard) Determination 2019. |
4. References to numbered sections or other provisions are to those sections or other provisions of the determination, unless indicated otherwise.
Context
5. The Act was amended in 2017 to raise the education, training, and ethical standards of financial advisers
6. Section 921B of the Act sets 4 standards that relevant providers must meet (education and training standards). Section 921C of the Act prohibits ASIC from granting a financial services licence to a person who has not met the education and training standards. It also prohibits licensees and authorised representatives of licensees from authorising other persons to give personal advice to retail clients in relation to relevant financial products unless the other persons have met the education and training standards.
7. The second of the standards requires a person to pass an exam approved by the Authority. Under subparagraph 921U(2)(a)(ii) of the Act, the Authority must, by legislative instrument, approve an exam. The Corporations (Relevant Providers Exams Standard) Determination 2019 sets out the requirements for, and approves, the exam for the purposes of subparagraph 921U(2)(a)(ii) of the Act.
8. One requirement is that a candidate is not allowed to sit an exam again if the candidate has sat the exam within the previous 3 months. This determination removes that restriction for the exam to be held in about November 2021.
Details
Name
9. Section 1 provides that the name of the instrument is the Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021.
Commencement
10. Section 2 provides that the determination will commence on the day after it is registered in the Federal Register of Legislation.
Authority
11. Section 3 sets out the legislative authority for making the instrument: subparagraph 921U(2)(a)(ii) of the Act.
Schedules
12. Section 4 give effect to Schedule 1.
Schedule 1
13. Schedule 1 (Amendments) has 1 item, which amends paragraph 4(2)(c) of the 2019 determination to remove the “3 months” requirement but only in respect of the exam to be held between 1 November 2021 and 31 December 2021.
Consultation
14. Given the limited and beneficial effects of the amendment, the Authority undertook limited consultation in July 2021, with 8 formal submissions received. All feedback was given due consideration. The Authority concluded that the provisions of the instrument are appropriate.
Regulatory impact
15. The Office of Best Practice Regulation has confirmed that no Regulatory Impact Statement is needed for the determination.
Statement of compatibility with human rights
16. The instrument does not engage any of human rights or freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
The Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021 was introduced to amend the Corporations (Relevant Providers Exams Standard) Determination 2019, addressing a specific issue where financial advisers were prevented from sitting an exam approved by the Financial Adviser Standards and Ethics Authority Ltd (Authority) if they had already sat the exam within the preceding three months. Enacted by the Authority, this instrument aims to ensure that advisers can sit the November 2021 exam, regardless of having sat the exam in the three months prior, to prevent potential barriers in meeting educational standards. The determination was made to facilitate the timely assessment of advisers' competencies and to align with the legislative intent to uphold high standards in the financial advisory sector.
Scope and Application
The Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021 amends the Corporations (Relevant Providers Exams Standard) Determination 2019 to facilitate the participation of financial advisers in the exam scheduled for November 2021, by removing the restriction that prevents an adviser from sitting the exam if they have already done so within the previous three months. This amendment applies to financial advisers who wish to take the exam between 1 November 2021 and 31 December 2021, ensuring they can participate regardless of their recent exam history. The amendment was made by the Financial Adviser Standards and Ethics Authority Ltd, under the authority conferred by subparagraph 921U(2)(a)(ii) of the Corporations Act 2001. This amendment is specifically targeted to address the unique circumstances arising from the scheduling of the November 2021 exam and does not alter the broader requirements set out in the 2019 determination. The amendment will commence on the day after it is registered in the Federal Register of Legislation.
Key Provisions
The main operative sections of the Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021, as referenced in section 1, amend the Corporations (Relevant Providers Exams Standard) Determination 2019. The key change is found in Schedule 1, specifically item 1, which modifies paragraph 4(2)(c) of the 2019 determination. This amendment removes the restriction that prevents an adviser from sitting the exam if they have sat it within the previous 3 months, but only for the exam scheduled between 1 November 2021 and 31 December 2021. The effect of this amendment is to allow advisers who have recently sat the exam to attempt the November 2021 exam, provided they meet all other eligibility requirements.
The obligations and requirements imposed by the Act are primarily directed towards relevant providers and financial advisers. Under section 921B of the Corporations Act 2001, relevant providers must meet four specified standards, including education and training standards. Section 921C further mandates that Australian Securities and Investments Commission (ASIC) cannot grant a financial services licence to a person who does not meet these standards, and prohibits licensees and their authorised representatives from authorising others to give personal advice to retail clients unless those individuals have passed the required exam. The amended Determination now allows for flexibility in the timing of the exam, ensuring that advisers who have recently sat the exam can participate in the November 2021 exam without being restricted by the previous 3-month waiting period.
In terms of offences, penalties, or consequences for breach, the Determination itself does not specify any particular offences or penalties. However, under the Corporations Act 2001, failing to meet the education and training standards could result in significant regulatory consequences. For instance, ASIC may refuse to grant a financial services licence to an individual who does not meet these standards, which would prevent them from operating as a financial adviser. Additionally, licensees who authorise individuals to give personal advice without ensuring they have met the required standards could face regulatory action, including potential fines and other sanctions. The exact penalties for such breaches would depend on the specific circumstances and the provisions of the Corporations Act.
The Corporations (Relevant Providers Exams Standard) (Amendment No. 1) Determination 2021 aims to provide temporary flexibility for financial advisers sitting the November 2021 exam, ensuring they can participate even if they have recently taken the exam. This amendment aligns with the legislative framework established by the Corporations Act 2001, which sets stringent education and training standards for financial advisers to protect retail clients. While the Determination itself does not outline specific penalties for breaches of these standards, the broader legislative context provides a robust framework for enforcing compliance and ensuring high standards of professionalism and ethics in the financial advisory sector.