House of Representatives

Explanatory Memorandum

(Circulated by authority of the Assistant Treasurer and Minister for Financial Services, the Hon Stephen Jones MP)

Chapter 2: Recognising experience in the financial advice industry

Outline of chapter

2.1 Schedule 2 to the Bill amends the Corporations Act to deliver the Government's election commitment to better recognise the experience of existing financial advisers. This Schedule also addresses technical limitations in the current framework, relevant to both new entrants into the financial advice industry and tax agents providing a tax (financial) advice service to retail clients. The amendments resolve unintended consequences introduced through the Professional Standards of Financial Advisers Act and the Better Advice Act while continuing to support the professionalisation of the financial advice sector.

Context of amendments

2.2 The Professional Standards of Financial Advisers Act and the Better Advice Act implemented new education and training requirements to improve consumer outcomes and increase public confidence in the financial advice industry. However, practical implementation issues have arisen:

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Existing financial advisers with extensive industry experience and a clean disciplinary record are leaving the industry.

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Potential new entrants are unable to meet the qualifications standard for technical reasons, despite meeting the substance of that requirement.

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For financial advisers who are also qualified tax agents, there is unnecessary duplication of qualification requirements to provide tax (financial) advice services to retail clients.

2.3 This Schedule contains amendments to address these implementation issues.

Comparison of key features of new law and current law

Table 2.1 Comparison of new law and current law

Detailed explanation of new law

Education and training standards for financial advisers

2.4 A 'relevant provider' is a person who is authorised to provide personal advice to retail clients about financial products in accordance with the requirements of Part 7.6 of the Corporations Act. In this explanatory memorandum, the term 'financial adviser' is used instead of 'relevant provider'.

2.5 A financial adviser must meet the four 'education and training standards' outlined in section 921B of the Corporations Act:

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qualifications standard;

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exam standard;

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work and training standard; and

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continuing professional development standard.

2.6 To meet the qualifications standard for financial advisers, a person is generally required to complete a bachelor or higher degree, or equivalent qualification, approved by the Minister in the Approved Qualifications Determination.

Experienced financial advisers

Who is eligible for the experienced provider pathway?

2.7 Current transitional arrangements for 'existing providers' mean that existing financial advisers have until 1 January 2026 to meet the qualifications standard, while continuing to provide financial advice. To meet this standard, existing financial advisers need to complete at most eight units.

2.8 Schedule 2 to the Bill amends the Corporations Act to insert new transitional arrangements for experienced financial advisers with a clean disciplinary record.

2.9 These new transitional arrangements provide that financial advisers who meet the criteria for an 'experienced provider' are not required to undertake further study to meet the qualifications standard. If an existing provider does not meet the criteria for an 'experienced provider', they will need to undertake further study, as required under the existing transitional arrangements, to meet the qualifications standard by 1 January 2026.

2.10 An 'experienced provider' is an individual who:

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was authorised to provide personal advice to a retail client for a minimum of 10 years (need not be consecutive), during the period 1 January 2007 to 31 December 2021; and

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had a clean disciplinary record as at 31 December 2021, that is:

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never been banned or disqualified under Division 8 of Part 7.6 of the Corporations Act; and

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never given an undertaking under section 93AA or section 171E of the ASIC Act.

[Schedule 2, item 3, section 1684 (definition of experienced provider) of the Corporations Act]

2.11 As with all financial advisers, an experienced provider also needs to meet the requirements of the exam standard. If a person fails to pass the financial adviser exam, they cannot provide financial advice.

2.12 A person is not eligible to access the experienced provider pathway if they had remained authorised to provide financial advice on their exam cut-off date, despite having failed to pass the financial adviser exam by that date. This is consistent with the current transitional arrangements applying to existing providers, whereby a person is no longer eligible for those transitional arrangements if they remained authorised to provide financial advice on the exam cut-off date, despite not passing the exam before that date. [Schedule 2, item 7, subsection 1684AA(1) of the Corporations Act]

2.13 If a person left the industry before the exam cut-off date, they can return at any time - and access the experienced provider pathway, if they meet the eligibility criteria. Before being authorised to provide advice, the adviser will need to pass the financial adviser exam.

Diagram 2.1 Am I eligible for the experienced provider pathway?

How to access the experienced provider pathway

2.14 If a financial adviser wishes to rely on the new transitional arrangements for experienced providers, the financial adviser must make a self-declaration confirming that they have met all the criteria to be an experienced provider. [Schedule 2, item 7, subsections 1684AA(1) and (2) of the Corporations Act]

2.15 There is no deadline by which a person must make a self-declaration if they wish to access the experienced provider pathway. However, if an existing financial adviser is authorised on 1 January 2026 and intends to continue in the industry after that date, but they do not otherwise meet the qualifications standard, they will need to make their self-declaration to access the experienced provider pathway before 1 January 2026. Otherwise, under the current transitional arrangements for existing providers, their authorisation would cease on that date. They could return to the industry after making their self-declaration to access the experienced provider pathway. Criminal and/or civil penalties would apply if a person continued to provide financial advice to retail clients while unauthorised. [Schedule 2, item 7, Notes 1 and 2 to subsection 1684AA(2) of the Corporations Act]

2.16 If the financial adviser is authorised to provide personal advice to retail clients on behalf of an Australian financial services licensee, they must provide their self-declaration to the licensee. If the financial adviser is authorised by multiple licensees, or moves to another licensee, they must give a copy of their self-declaration to each licensee. [Schedule 2, item 7, subsection 1684AA(7) of the Corporations Act]

Example 2.1 Experienced provider currently working in the industry

Silpa is currently working part-time as a financial adviser. She has been a financial adviser for over 20 years. She has never been banned or disqualified from working as a financial adviser and has never given an enforceable undertaking to ASIC. Her work history includes periods of full-time and part-time work, as well as two career breaks while on maternity leave. Silpa assesses that she meets the 10 year experience requirements - having been authorised to provide financial advice to retail clients for over 10 years during the 15 year window - and that she is eligible for the experienced provider pathway (as an alternative to completing an approved qualification by 1 January 2026).

In December 2025, Silpa makes a written declaration that she has met the criteria to be an experienced provider and emails a copy of it to her authorising licensee. By making this declaration she is taken to have met the qualifications standard and is able to continue practicing without completing further education.

Example 2.2 Experienced provider returning to the industry

Kirby had been working as a financial adviser for 25 years. He left the industry in 2021, prior to the exam cut-off date. During his career, Kirby had never been banned or disqualified from working as a financial adviser, nor given an enforceable undertaking to ASIC.

In 2024, Kirby decides to return to the industry. Kirby assesses that he meets the 10 year experience requirements - having been authorised to provide financial advice to retail clients for over 10 years during the 15 year window - and that he is eligible for the experienced provider pathway (as an alternative to completing an approved qualification by 1 January 2026). He makes a written declaration that he has met the criteria to be an experienced provider.

Once Kirby passes the financial adviser exam, he can then be authorised to provide financial advice. He must provide a copy of his self-declaration to his authorising licensee.

2.17 A notice must be lodged with ASIC. Consistent with the existing notification requirements applying to financial advisers, notices must be lodged by the Australian financial services licensee. If the experienced provider is not a licensee, their authorising licensee must lodge a notice with ASIC. Where there is more than one authorising licensee, each authorising licensee must lodge a notice with ASIC. [Schedule 2, item 7, subsections 168AA(3) and (4) of the Corporations Act]

2.18 The notice must include identifying details of the experienced provider, and a written statement as follows:

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if the experienced provider is an Australian financial services licensee-a written statement confirming that they have made a self-declaration; or

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otherwise-a written statement by the authorising licensee confirming that they have received a copy of the experienced provider's self-declaration.

[Schedule 2, item 7, subsection 1684AA(6) of the Corporations Act]

2.19 Licensees are not required to lodge these notices with ASIC until 1 July 2024. This gives ASIC time to prepare its systems to receive these notices. This has no impact on the timing for an experienced provider to make their self-declaration. [Schedule 2, item 7, subsections 1684AA(3) and (5) of the Corporations Act]

2.20 For experienced providers who are licensees, they must lodge a notice with ASIC within the following timeframes:

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If they make their self-declaration before 1 July 2024-within 30 business days after 1 July 2024.

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If they make their self-declaration on or after 1 July 2024-within 30 business days after making their self-declaration.

[Schedule 2, item 7, subsections 1864AA(3) and (5) of the Corporations Act]

2.21 For experienced providers who are not licensees, each authorising licensee must lodge a notice with ASIC within the following timeframes:

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If the licensee receives the self-declaration from the experienced provider before 1 July 2024, and the experienced provider is still authorised by that licensee on 1 July 2024-within 30 business days after 1 July 2024.

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If the licensee receives the self-declaration on or after 1 July 2024-within 30 business days after receiving the self-declaration from the experienced provider.

[Schedule 2, item 7, subsections 1684AA(3) and (5) of the Corporations Act]

2.22 Upon receipt of such a notice, ASIC must update the Financial Advisers Register to reflect that the financial adviser has declared that they meet the criteria for an experienced provider. ASIC will use its discretion as to the information recorded on the public-facing Moneysmart website to ensure that consumers have clear information available to enable them to make informed decisions when looking for a financial adviser. [Schedule 2, item 7, subsection 1684AA(8) of the Corporations Act]

2.23 The notice requirements are consistent with the existing notification requirements applying to financial advisers. Consistent with existing obligations, Australian financial services licensees are held accountable for authorising an 'experienced provider' to provide financial advice as a representative of that licensee. The individual financial adviser is accountable for making a claim that they meet the 'experienced provider' criteria. Criminal and/or civil penalties apply if either or both the financial adviser or licensee give false or misleading information. [Schedule 2, item 7, subsection 1684AA(9) and Note 3 to subsection 1684AA(2) of the Corporations Act]

2.24 Division 3 of Part 5 to this Schedule also makes a contingent amendment to subsection 1684AA(9) - repealing the reference to "notice provision" and substituting "provision referred to in subsection 922L(1)" - which is contingent on the commencement of Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023. If enacted, that Act will delete definitions for terms that are only used once or a small number of times throughout the Corporations Act and incorporates the substance of the definition into the relevant section(s). This is consistent with the Australian Law Reform Commission's report finding, from the Financial Services Legislation Interim Report A (ALRC Report 137, 2021), that a term should only be defined if it enhances readability or significantly reduces the need to repeat text. [Schedule 2, item 27, subsection 168AA(9) of the Corporations Act]

2.25 This contingent amendment (reference to notice provisions) ensures that the amendment to subsection 1684AA(9) is made appropriately, irrespective of whether references to notice provisions are changed as introduced by the amendments in Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 (if enacted).

Diagram 2.2 Self-declaration and ASIC notification process

Example 2.3 Experienced provider who is an authorised representative

Amanda has worked full-time as a financial adviser from 2005 to the present day. In that time, she has never been banned or disqualified from working as a financial adviser and has never given an enforceable undertaking to ASIC. Given her years of experience and clean disciplinary record, she is eligible for the experienced provider pathway.

In January 2024 Amanda makes a written declaration that she has met the criteria to be an experienced provider. She is therefore eligible for the experienced provider pathway which is an alternative to completing an approved qualification by 1 January 2026. By making this declaration she is taken to have met the qualifications standard and is able to continue practicing after 1 January 2026.

Shortly after making her self-declaration, Amanda emails a copy to her authorising licensee. In July 2024, the authorising licensee notifies ASIC that they have received a copy of Amanda's self-declaration.

2.26 Experienced providers must continue to comply with the ongoing requirements of the continuing professional development standard.

New entrants

2.27 The Approved Qualifications Determination lists qualifications approved by the Minister. These approved qualifications may be conditional on the person having commenced the course after a specified date and having completed specified 'units of study' as part of that course. Currently, to meet the qualifications standard, a person's academic transcript must exactly match the legislative instrument, inclusive of any conditions.

2.28 Potential new entrants may have completed a qualification listed in the Approved Qualifications Determination, but their course transcript may not meet all the prescribed conditions for that approved qualification. This may occur for technical reasons, such as (but not limited to):

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administrative changes to courses, not yet reflected in the Approved Qualifications Determination;

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a person commencing their studies earlier than the dates specified for their qualification in the Approved Qualifications Determination; or

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a person completing a requisite unit with a different education provider, following the completion of a qualification.

2.29 This means that a potential new entrant may be prevented from becoming a financial adviser.

Flexibility in meeting conditions of approved qualifications

2.30 Schedule 2 to the Bill amends the Corporations Act to enable greater flexibility for a new entrant to demonstrate that they satisfy the conditions of an approved qualification. This is achieved by amending the Minister's current power to approve qualifications through a determination. In addition to approving relevant qualifications and imposing conditions for each of those approved qualifications, the Minister may also provide flexibility to new entrants by approving one or more ways to satisfy the conditions. [Schedule 2, items 8 and 11, subsections 921B(2) and (6) of the Corporations Act]

2.31 This flexibility enables the Minister to determine alternative ways for a potential new entrant to demonstrate that they have substantively met the conditions for an approved qualification, where this is not evident from that person's course transcript. For example, subject to passage of this Bill, the Minister may amend the Approved Qualifications Determination to enable a person to satisfy condition(s) by providing written confirmation from their course provider that they have substantively met the conditions for the specified approved qualification.

Applying for individual approval of equivalent qualifications

2.32 Schedule 2 to the Bill amends the Corporations Act to allow a person with equivalent domestic qualifications to apply to the Minister for approval of their qualification. [Schedule 2, item 14, section 921GA of the Corporations Act]

2.33 There may be situations where a person has completed a qualification listed in the Approved Qualifications Determination but is unable to demonstrate that they satisfy the prescribed conditions. For example, a person may encounter difficulties in obtaining written confirmation from a course provider. Such a person could apply to the Minister for approval of their qualification.

2.34 A person who holds such an approval from the Minister satisfies the qualifications standard. [Schedule 2, item 9, paragraph 921B(2)(c) of the Corporations Act]

2.35 A person is eligible to apply to the Minister for approval of an equivalent domestic qualification if:

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the person has completed one or more bachelor or higher degree(s) listed in the Minister's Determination under paragraph 921B(6)(a); and

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the person has not met all the requirements of an approved degree.

[Schedule 2, item 14, subsection 921GA(1) of the Corporations Act]

2.36 The application must be in writing, and in the form approved, in writing, by the Minister. [Schedule 2, item 14, subsection 921GA(2) of the Corporations Act]

2.37 The list of qualifications approved by the Minister in the Approved Qualifications Determination remains the primary avenue for prospective financial advisers to meet the qualifications standard. For new entrants who have studied in Australia, the new option to seek individual approval is similarly restricted to those degrees already approved by the Minister in the legislative instrument. This ensures the high entry standards for the profession are upheld, whilst ensuring that new entrants who have genuinely studied equivalent qualifications are not unnecessarily prevented from becoming financial advisers for a technical reason.

2.38 The Minister has the power to approve individual applications for equivalent domestic qualifications, if satisfied that the applicant's qualification is equivalent to one in the Approved Qualifications Determination. The Minister must either approve or refuse to approve applications for equivalent domestic qualifications. The approval or refusal must be given to the applicant in writing. [Schedule 2, item 14, subsections 921GA(3) and (4) of the Corporations Act]

2.39 The new option to seek individual approval is primarily intended to facilitate new entrants who have completed a bachelor or higher degree into the financial advice industry. It does not apply to existing financial advisers who have undertaken alternative courses as permitted by the current transitional arrangements (see paragraph 1684A(2)(b)). However, the option to seek individual approval is available to existing advisers on the same basis as new entrants - that is, where the adviser has completed a bachelor or higher degree approved by the Minister in the Approved Qualifications Determination, but they have not met all the requirements of that approved degree.

Example 2.4

Lucy completes a Bachelor degree listed in the Approved Qualifications Determination with a Higher Education Provider. After graduation Lucy realises that she does not satisfy the education requirements to be a financial adviser as she has not completed the prescribed unit in business law. Lucy enrols in a business law unit with another Higher Education Provider.

Lucy then applies to the Minister for approval that she has completed an approved degree, on the basis of her Bachelor degree and the additional unit she completed separately. The Minister is satisfied that the units are equivalent, meaning Lucy has completed all the necessary units of study to become a financial adviser. The Minister approves her application.

2.40 The Ministerial power to approve or refuse equivalent domestic qualifications can be delegated to an officer of the Department under section 1345A of the Corporations Act.

2.41 A decision by the Minister (or their delegate) to approve or refuse an application is subject to merits review under section 1317B of the Corporations Act.

Financial advisers who are also registered tax agents

2.42 A financial adviser must be a 'qualified tax relevant provider' in order to provide tax (financial) advice services to retail clients. To do so, they must meet the additional education requirements determined by the Minister in the Education and Training Standards Determination (section 921BB of the Corporations Act). These additional requirements ensure that financial advisers have the necessary understanding of commercial and tax law to enable them to provide financial advice on tax-related matters.

2.43 A person who is registered as a financial adviser under the Corporations Act may also be registered as a tax agent under the Tax Agent Services Act. To be a registered tax agent, they must meet the qualifications and experience requirements in the Tax Agent Services Act.

2.44 Schedule 2 to the Bill amends the definition of qualified tax relevant provider in the Corporations Act to provide that financial advisers who are registered tax agents are also qualified tax relevant providers. This removes the duplication of education requirements, enabling those financial advisers to provide tax (financial) advice to retail clients without needing to undertake additional study. [Schedule 2, items 25 and 26, section 910A (definition of qualified tax relevant provider) of the Corporations Act]

2.45 This amendment to the definition of qualified tax relevant provider is a contingent amendment under Divisions 1 and 2 of Part 5 of this Schedule as it is contingent on the commencement of Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023. If enacted, that Act amends the Corporations Act to create a single glossary to contain a complete list of all defined terms used in the main body of the Corporations Act.

2.46 The contingent amendments (main amendment and contingent amendment if the Law Improvement measure commences second) ensure that the amendment to the definition of qualified tax relevant provider is made appropriately, irrespective of whether that definition is located in section 910A of the Corporations Act or in a single glossary as introduced by the amendments in Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 (if enacted).

2.47 Schedule 2 to the Bill also includes a minor amendment to clarify that a determination made under subsection 921BB(1) - prescribing the additional education requirements for a financial adviser to provide tax (financial) advice services to retail clients - may deal with matters of a transitional nature. [Schedule 2, item 18, Note to subsection 921BB(1) of the Corporations Act]

Consequential amendments

2.48 Consequential amendments to Part 10.57 of the Act reflect that the Part contains transitional provisions relating to two amending Acts. An editorial amendment is made to repeal the definition of relevant provider in Part 10.57 and in its place add a new subsection to ensure that expressions used in Part 10.57 and Part 7.6 have the same meaning. There is no change to the definition of relevant provider. [Schedule 2, items 1, 2 and 4 to 6, Part 10.57 (heading) and section 1684 of the Corporations Act]

2.49 Consequential amendments are made to various provisions that refer to the Minister's current power to approve relevant qualifications to ensure those provisions continue to refer only to the Minister's power to approve relevant qualifications, not the Minister's new power to approve one or more ways to satisfy the conditions. Amendments are made to the transitional provisions in Part 10.57 to update references to the qualifications standard, referring to the standard as amended by Schedule 2 to this Bill. [Schedule 2, items 10, 12, 13, 15, 16, 17, 28 and 29, sections 921B, 921G, 1684A, 1684C and 1684D of the Corporations Act]

2.50 Consequential amendments are also made to ensure that ASIC may grant an Australian financial services licence to an applicant that is a registered tax agent, and that licensees may authorise registered tax agents to provide tax (financial) advice services to retail clients without needing to undertake additional study. [Schedule 2, items 19 to 22, section 921C of the Corporations Act]

Commencement, application, and transitional provisions

2.51 Other than the contingent amendments in Parts 5 and 6, the amendments in Schedule 2 commence on the day after Royal Assent. [Table item 3 of the commencement table]

2.52 The amendments in Parts 3 and 5 of this Schedule - relating to financial advisers who are also registered as tax agents - apply in relation to a person who is, or becomes, a registered tax agent on or after 1 January 2022. This retrospective application aligns with the commencement of the definition of 'qualified tax relevant provider' under the Better Advice Act. Retrospective application is appropriate to ensure that financial advisers who were also registered tax agents were not inadvertently disadvantaged following commencement of the Better Advice Act. [Schedule 2, item 24, section 1684VC of the Corporations Act]

2.53 Transitional provisions in Part 4 of this Schedule provide for the approval of domestic qualifications and the continued application of the Approved Qualifications Determination. [Schedule 2, items 23 and 24, Part 10.57 (heading) and sections 1684VA and 1684VB of the Corporations Act]

Contingent amendments

2.54 The contingent amendments in Divisions 1 and 2 of Part 5 - relating to financial advisers who are also registered as tax agents - commence on the day after Royal Assent. However, they do not commence at all if Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 commences at that time (Division 1-Main amendment). If Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 commences first, the amendments relating to financial advisers registered who are also registered as tax agents commence immediately after (Division 2-Contingent amendment). [Table items 4 and 5 of the commencement table]

2.55 The contingent amendment in Division 3 of Part 5 - relating to the notice provision for the experienced provider pathway - commence on the day after Royal Assent. However, it does not commence at all if Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 commences at that time. If Schedule 2 to the Treasury Laws Amendment (2023 Law Improvement Package No. 1) Act 2023 commences first, the amendments relating to the notice provision for the experienced provider pathway commence immediately after. [Table item 6 of the commencement table]

2.56 The contingent amendments in Part 6 - relating to the Minister's power to approve equivalent qualifications for new entrants - commence on the day after Royal Assent. However, they do not commence at all if Part 1 of Schedule 4 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 commences at that time (Division 1-Main amendment). If Part 1 of Schedule 4 to the Treasury Laws Amendment (Modernising Business Communications and Other Measures) Act 2023 commences first, the amendments relating to relating to the Minister's power to approve equivalent qualifications for new entrants commence immediately after (Division 2-Contingent amendment). [Table items 7 and 8 of the commencement table]