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ASIC proposes updates to organisational competence requirements for advice licensees

Ann-Marie_ColemanASIC has proposed updates to Regulatory Guide 105 Licensing: Organisational competence (RG 105) that would see advice licensees required to have a responsible manager (RM) that meets a new Option 6 knowledge and skills requirement. Consultation Paper 305, released yesterday by ASIC, includes updates designed to support the professional standards reforms, which aim to lift the education, training and ethical standards in the financial advice industry.

For the purpose of the Consultation Paper, ‘advice licensees’ are licensees who provide personal advice to retail clients in relation to financial products other than basic banking products, general insurance products and consumer credit insurance. This means licensees who provide personal advice in relation to life insurance products will be captured by the proposal.

Some of the proposed changes include requiring all advice licensees to have at least one responsible manager who has satisfied a host of education and training elements (under the new Option 6) including:

  • a financial adviser exam set by the Financial Adviser Standards and Ethics Authority (FASEA);
  • a relevant bachelor or higher degree (or equivalent qualification) approved by the FASEA;
  • CPD requirements set by FASEA.

Both new and existing RMs who wish to satisfy Option 6 would have until 1 January 2021 to pass the exam and until 1 January 2024 to satisfy the degree requirement.

It is hoped that these new measures will strengthen the organisational competence of financial advice licensees by ensuring that financial advisers are always supervised by at least one manager who has satisfied the new and improved education and training standards.

ASIC are inviting input on the proposed updates with all submissions due by 6 December 2018. An updated RG 105 setting out the new requirements for advice licensees is expected to be released in early 2019.

A full copy of the consultation paper and a draft version of the updated RG 105 can be found here.