The banking industry and the Federal Government are doing extensive work to raise the competency of financial advisers so Australians can have more confidence in the financial advice they receive.
This means financial advisers:
- Will meet a new code of ethics.
- Must complete an entry exam and meet higher education and qualification standards, including having a degree or equivalent, before they can provide advice.
- Must maintain ongoing professional development accreditation.
- Must complete a professional year involving additional oversight, if they’re new to the profession.
These changes will build on the important changes made under the Future of Financial Advice reforms, including a duty to only provide advice in the best interests of clients.
Enhanced financial adviser reference checking
Banks employ around 25% of financial advisers in Australia, but are determined to set the highest professional standards for ethical conduct among advisers.
The Australian Banking Association has established a new, industry-wide hiring protocol, which builds on banks’ existing reference checking practices, to ensure they know a lot more about a financial adviser’s conduct history before employing them.
The protocol sets minimum standards for banks to check the financial adviser’s previous conduct history, quality of advice, risk management and compliance record.
This is designed to prevent a financial planner with a poor conduct record from being hired by another institution where they could continue poor practices.