On 20 October 2015, the Commonwealth Government released its response to the Financial System Inquiry.

The competency and professional standards of financial advisors are to be raised by legislative amendments. The Commonwealth Government will require financial advisers to hold a tertiary degree, pass an examination, undertake continuous professional development, subscribe to a code of ethics and undertake a professional year.

Legislation will also recognise a new independent body which will be funded by the industry and will oversee financial advisers’ new obligations.

The recently established register of financial advisers will be amended to clearly identify whether individuals meet the new standards and whether there are relevant bans, disqualifications or code breaches applicable to that individual. The terms ‘financial adviser’ and ‘financial planner’ will be restricted to those listed on the register.

A statutory review in 2019 will consider whether this new regulatory framework has raised the professional standards of financial advisers and whether further changes are required.

The Government is to introduce the legislative amendments to raise the professional standards of financial advisers by mid-2016. We will continue to monitor the situation and update further once the draft legislation is released.