Expect confusion around who is on and off the FAR

Scores of financial advisers are at risk of finding themselves removed from the Financial Adviser Register (FAR) because of the complexities of reporting who has and has not passed the Financial Adviser Standards and Ethics Authority (FASEA) exam.

While the Australian Securities and Investments Commission (ASIC) by late on Monday had not completed its update of the register, the expectation amongst groups such as Wealth Data was that many advisers were likely to find themselves impacted.

This was because licensees are responsible for reporting which of their advisers have passed the FASEA exam and some may not have made that report in time for ASIC’s revision of the register kicking off 2022.

At the same time, BT Technical Services head, Bryan Ashenden pointed to the FASEA exam as being one of the continuing areas of concern for advisers as they closed out 2021 and he pointed out the implications in terms of their listing on the FAR.

“With the passage of the Better Advice legislation and the release of accompanying regulations, it’s now clear that an ‘existing relevant provider’ may have until 30 September 2022 to successfully complete the FASEA exam. However, advisers who have yet to sit or pass the exam are asking how the rules may apply in their particular circumstances,” Ashenden said in reference to issues raised by advisers.

“Advisers will only be given the extension if they had made at least two unsuccessful attempts by the end of 2021. With results for the last sitting in 2021 now available, advisers have recently been able to find out if they qualify for the extended time. For those advisers who left it until the last sitting to make their first attempt and were unsuccessful, there will be no extension.”

“The implication, based on current law, is that these advisers will have been removed from the Financial Adviser Register as at 1 January 2022, and will no longer be able to provide personal advice to a retail client,” Ashenden said.

“It’s important to point out that they can still provide advice to wholesale clients, and help with running successful financial planning practices. Furthermore, whilst they cannot be the supervisor of a new entrant undertaking their professional year, they can still act as a mentor – and so advice practices can still benefit from these advisers’ experience and expertise.”

Among the other issues listed by BT as areas of concern for advisers was the consultation process around Standard 3 of the FASEA Code of Ethics, reviewing client advice to assess the impact of the removal of the work test for non-concessional contributions for clients between ages 67 and 74, revisiting strategies relating to the lowering of age for downsizer contributions and keeping an eye on regulatory developments relating to exiting certain complying income streams.