This update covers all aspects of financial advice regulation and includes a wide range of content relevant to Australian Financial Services (AFS) licensees, particularly those holding advisory licenses and financial advisers.
- Professional standards and qualification assessments
- Experienced provider pathway
- Review of compliance with professional standards and professional year programs
- First internal dispute resolution data report and key findings
- Initial report on AI adoption by licensees
- Summary of recent ASIC enforcement actions
- Update from the Financial Services and Credit Panel
- Review of advice related to self-managed super fund establishment
- Update on the reportable situations regime
- Updates to ASIC’s newsroom
- Recent ASIC announcements regarding financial advice
Professional Standards and Qualification Assessments
Since January 1, 2019, specific professional standards have applied to relevant providers (advisers authorized to provide personal advice to retail clients regarding financial products) and provisional relevant providers (individuals in the third or fourth quarter of their professional year).
Relevant providers and provisional relevant providers must adhere to the ‘qualifications standard’ outlined in Section 921B(2) of the Corporations Act 2001. Existing providers have until January 1, 2026, to meet this standard.
To support the industry, ASIC has introduced additional guidance for assessing individual qualifications and training requirements. This includes practical examples demonstrating how AFS licensees should evaluate and input relevant provider qualifications into the financial advisers register. Further resources, including a recorded webinar and FAQs, are available on the ASIC website.
Experienced Provider Pathway
Financial advisers can qualify under the experienced provider pathway to meet the qualifications and professional year standards if they:
- Have at least 10 years of experience as a relevant provider between January 1, 2007, and December 31, 2021.
- Maintain a clean disciplinary record as of December 31, 2021.
Additionally, advisers who did not pass the financial adviser exam before their applicable deadline (either January 1, 2022, or October 1, 2022, if granted an extension) must have ceased providing personal advice before their exam cut-off date.
Eligible financial advisers must submit a written declaration confirming their experience and provide a copy to their authorizing AFS licensee(s). Licensees must then notify ASIC within 30 business days of receiving this declaration.
Advisers planning to utilize this pathway should submit their declaration before January 1, 2026, to ensure continued authorization and registration.
Compliance Review of Professional Standards and Professional Year Programs
ASIC recently examined a selection of records from AFS licensees regarding their compliance with professional standards for financial advisers. Additionally, ASIC assessed a sample of professional year programs to ensure alignment with regulatory expectations.
Internal Dispute Resolution Data Report and Findings
In December 2024, ASIC published Report 801, which provides insights from internal dispute resolution (IDR) data reporting between July 2023 and June 2024. This marks the first industry-wide publication under the IDR data reporting framework.
While IDR data enhances transparency and aids firms in improving complaint handling, ASIC noted inconsistencies in complaint volume reporting and identified data gaps. Notably, over 5,000 firms reported no complaints, exceeding expectations.
ASIC will evaluate compliance with IDR reporting obligations and encourage firms to review their data accuracy. Beginning this year, ASIC will also start publishing firm-specific complaint data.
AI Adoption by Licensees: First ASIC Report
AI is reshaping financial services, offering enhanced efficiency and accessibility. However, it also introduces risks such as bias, misinformation, and consumer trust erosion.
ASIC’s Report 798 examines AI adoption among 23 AFS and credit licensees, highlighting a rapid increase in AI usage, particularly generative AI. Despite this growth, governance and risk management frameworks have been slow to evolve, raising concerns about firms’ preparedness.
ASIC urges financial services licensees to ensure their governance structures keep pace with AI advancements.
Summary of Recent ASIC Enforcement Actions
ASIC continues to take enforcement actions against non-compliance. Recent cases highlight the importance of adherence to financial advice regulations.
Update from the Financial Services and Credit Panel (FSCP)
Operating for two years, the FSCP makes disciplinary decisions regarding financial advisers. ASIC convenes FSCP panels, which include industry participants, to assess cases of suspected misconduct.
ASIC maintains an FSCP Outcomes Register, summarizing key disciplinary decisions, including written supervision directives, reprimands, and warnings for compliance breaches.
Review of Advice on Self-Managed Super Funds (SMSFs)
ASIC’s Corporate Plan 2024–25 includes a review of personal advice provided to retail clients regarding SMSF establishment. The review focuses on whether SMSFs are being recommended appropriately and their impact on clients’ retirement outcomes.
ASIC will evaluate advice files and AFS licensees’ oversight mechanisms, aiming to improve industry standards. Findings will be shared publicly, and regulatory actions will be taken where necessary.
Reportable Situations Regime Update
The reportable situations regime requires AFS licensees to disclose breaches to ASIC, fostering industry accountability and regulatory oversight.
ASIC’s latest Report 800 outlines trends from July 2023 to June 2024 and provides guidance on improving compliance. ASIC emphasizes the need for firms to promptly identify and remediate breaches.
ASIC Newsroom Updates
ASIC has improved its Newsroom subscription service, making it easier to access relevant regulatory updates. Subscribers can select preferred topics, including financial advice and regulatory changes, to stay informed.
Recent ASIC Announcements on Financial Advice
- November 21, 2024 – New and updated guidance in response to the DBFO Act.
- November 28, 2024 – ASIC Commissioner Alan Kirkland’s speech at the Financial Advice Association Australia Congress, emphasizing improvements in financial advice.
- December 3, 2024 – Address at the Conexus Financial Professional Planner Researcher Forum on better retirement outcomes.
- December 4, 2024 – ASIC signals continued work on enhancing the reportable situations regime.
For further details on any of these topics, visit ASIC’s official website.