House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)

Chapter 8 Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Corporations Amendment (Professional Standards of Financial Advisers) Bill 2016

8.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

8.2 The Bill amends the Corporations Act to raise the education, training and ethical standards of financial advisers by requiring relevant providers to hold a degree, undertake a professional year, pass an exam, undertake continuous professional development and comply with a Code of Ethics.

Human rights implications

8.3 The Bill engages the right to freely choose and accept work under Article 6(1) of the International Convention on Economic, Social and Cultural Rights.

8.4 The Bill provides that an individual will not be able to work as a financial adviser unless she / he holds a degree, has undertaken a professional year, passes an exam, undertakes continuous professional development and complies with a Code of Ethics.

8.5 These restrictions apply to any new advisers commencing from 1 January 2019. Existing financial advisers will have until 1 January 2024 to meet the requirements and have access to transitional arrangements.

8.6 The provisions in the Bill will therefore restrict individuals from working as financial advisers unless they comply with the new requirements. The restrictions are however justified as they create a minimum standard for financial advice which will give consumers a better service standard and instil confidence in the industry.

8.7 The transitional arrangements provide existing providers with additional time to meet the requirements and provide alternative arrangements such as bridging courses to minimise the impact while also ensuring that consumers benefit from a standard minimum level of service from the industry.

8.8 As such, the new requirements for financial advisers are consistent with the International Convention on Economic, Social and Cultural Rights.

Conclusion

8.9 The Bill is compatible with human rights as the requirements to work as a financial planner ensure that consumers get better service standards and instil confidence in the industry. The transitional arrangements ensure that the impact on existing financial advisers is minimised without compromising the new industry standard.