A key parliamentary committee has been warned that the transition to changed financial adviser qualifications standards from 1 January, next year, is likely to be another natural attrition point for adviser numbers.
Further the committee has been warned of the need to promptly pass legislation to fix acknowledged errors in legislation impacting the recognition of a vital strand of the adviser qualifications recognition regime.
The Financial Services Council (FSC) has used a submission to warn the Senate Economics Legislation Committee of the necessity to give financial advisers certainty by fixing what Treasury has already acknowledged was “an inadvertent drafting error”.
The Senate Committee is inquiring into omnibus legislation which, in part, aims to fix the “inadvertent drafting error” relating to the transitional arrangements for existing financial advice providers to meet the qualifications standard.
The submission points out that the amendment addresses a previous change to the law which removed financial advisers’ access to the alternative qualification pathway as a means of meeting the standard for existing providers.
“The alternative qualification pathway allows existing providers to meet the qualifications standard by completing the necessary top up course(s) determined by the Minister,” it said.
The submission said that in transitioning to the new professional standards, financial advisers have reasonably relied on the existing and availability of the qualification pathway to maintain their authorised status beyond 1 January, next year.
“Maintaining this pathway is critical to ensure many financial advisers can continue to provide advice to the many Australians who currently rely on it,” the FSC said.
“In recent years the number of financial advisers in Australia has reduced from around 28,000 in early 2019 to just over 15,400 at the present time. This has reduced the supply of advice, and, alongside other factors, increased the cost of advice to consumers.”
“The prospect of increased access to quality financial advice through Tranche 2 of the Delivering Better Advice Reforms remains within reach,” the submission said. “However, with the transition to the qualification standards at 1 January 2026 likely to be another natural attrition point for adviser numbers, Australia cannot afford the additional uncertainty for financial advisers and their clients which this inadvertent error could cause.
“It is therefore essential that the Parliament passes this amendment prior to 1 January 2026 to maintain the alternative qualifications pathway.”