The Government just made new exam and Code of Ethics rules

Alex Burke,  Senior Writer,  No More Practice Education

Today, legislation and regulations supporting the Better Advice Bill have been opened for consultation. You'll have until October 15th to provide feedback, so let's briefly discuss what's included in the package. 

Changes to the FASEA rules

First, the draft material sets in stone the exam deadline extension for advisers who have made two previous attempts before December 31st this year. As previously flagged by Senator Jane Hume, this affords advisers more time - up until September 30th next year - to complete the exam. 

Furthermore, the application fee for sitting the exam (as administered by ASIC from next year) will be set at $948 and is not subject to GST or indexation. An application for ASIC to review the marking of one or more answers to written-style exam questions will cost $218 and can only be made once per person, per exam. 

Following on from FASEA extending leniency to advisers applying for the November round of exams, the Government has also scrapped the three-month requirement in a new legislative instrument. This means advisers will no longer have to wait three months between exam attempts.

On top of this, advisers will no longer need to apply to seek alternative arrangements for sitting the exam; exams can now be taken in person, virtually, or through other arrangements. 

Single disciplinary body

The draft material also provides more detail as to when ASIC will be required to convene a Financial Services and Credit Panel (FSCP) under the terms of the new disciplinary regime for advisers. Generally, ASIC has discretion as to when a FSCP should be convened, but there are specific circumstances where it must do so. 

If the regulator is not taking any other action, a peer review must be conducted by an FSCP when: 

  • an adviser becomes insolvent under administration, is convicted of fraud or when ASIC reasonably believes an adviser is "not a fit and proper person to provide financial advice" 
  • an adviser fails to meet their education and training requirements, fails to supervise a provisional adviser or provides advice while unregistered
  • an adviser commits a breach of financial services law or was involved in another person's breach that ASIC determines to be "serious"
  • an adviser has at least twice been linked to a refusal or failure to honour an AFCA determination and ASIC believes that the consequences of them failing to do so has "serious consequences"

"Seriousness," in the list above, is determined by the material loss or damage to a client depending on their financial circumstances. 

In order to address potential regulatory duplication, the new draft legislation also amends the Better Advice Bill such that certain civil penalty provisions are not considered "significant," in and of themselves, for the purposes of the breach reporting framework. These included failure to comply with CPD requirements and breaches of the Code of Ethics.

These changes have been made, the Government explained, because breaches of CPD requirements "are already required to be reported to ASIC by financial services licensees under section 922HB of the Corporations Act," and because Standard 1 of the Code of Ethics requires advisers to "act in accordance with all applicable laws." 

"If breaches of the Code of Ethics were included in the breach reporting regime," the Government said, "then all breaches of a financial services law, no matter how minor, would have been reportable by virtue of a breach of the Code of Ethics being a restricted civil penalty provision." 

There are further proposed changes included, which we will discuss in more detail next week, but if you'd like to provide feedback before the October 15th deadline you can do so here.


The opinions expressed in this content are those of the author shown, and do not necessarily represent those of No More Practice Education Pty Ltd or its related entities. All content is intended for a professional financial adviser audience only and does not constitute financial advice. To view our full terms and conditions, click here

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