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Attention Relevant Providers - Registration Required

Dec 13, 2023
Financial Adviser Registration

Last month, ASIC released guidance (see Information Sheets 276 and 277) to financial advisers and Australian financial services (AFS) licensees about the new requirement for financial advisers to be registered, following the Treasury Laws Amendment (2023 Measures No. 1) Bill 2023 receiving Royal Assent on 27 November 2023.

From 1 February 2024, financial advisers who provide personal advice to retail clients on relevant financial products must be registered with ASIC.

  • This includes: relevant providers who only provide advice on time-sharing schemes (time-share advisers).
  • This doesn’t include: provisional relevant providers who cannot be registered.

This means, from 1 February 2024, AFS licensees must ensure they have authorised, appointed and registered a relevant provider before the relevant provider can lawfully provide personal advice to retail clients on relevant financial products.

Background

The requirement for financial advisers to be registered was introduced by the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021 in response to Recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. It is a new requirement that is separate to the pre-existing requirement for an AFS licensee to appoint a Relevant Provider to the Financial Advisers Register once they have been authorised.

Key dates

The registration is taking part in two stages:

  • Stage 1: By 1 February 2024, AFS licensees are to register the relevant providers they authorise (except provisional relevant providers).
  • Stage 2: Commencing no later than 1 July 2026, relevant providers will be required to register themselves.

Starting now, AFS licensees can apply to register their Relevant Providers using ASIC Connect. ASIC encourage this to be completed as early as possible to ensure relevant providers are registered before 1 February 2024.

Requirements for registration

There are a number of requirements that need to be met before a relevant provider can be registered. These are outlined below:

  • ‘Fit and proper’ declaration by the relevant provider
  • ‘Fit and proper’ declaration by the registering AFS licensee
  • Relevant provider must meet education and training standards outlined in the following sections:
    • s912B(2) – degree standard
    • s912B(3) – exam standard
    • s912B(4) – professional year standard
  • If the relevant provider currently provides, or will provide, tax (financial) advice services, they must meet the definition of the qualified tax relevant provider

Fees

Each application to register a relevant provider will incur a $50 fee (set by the Government). This fee is charged on lodgement of the application and will be incurred regardless of whether the application is approved or refused.

Requirements relating to relevant providers

What is the requirement?

How can the AFS licensee meet the requirement?

When should the AFS licensee do this?

When is it effective?

If a person is to provide personal advice on behalf of an AFS licensee, the AFS licensee must authorise the person.

By giving an individual a written notice or through the employment of an employee or director adviser.

Note: Self-licensed relevant providers become authorised when ASIC issues the AFS licence.

 

When authorising a person to be their relevant provider.

According to the terms of the written notice, employment agreement, or other agreement between the AFS licensee and the relevant provider.

The AFS licensee must notify ASIC of the authorisation.

By using ASIC Connect to appoint (add) the relevant provider to the Financial Advisers Register.

As soon as possible and by no later than 30 business days from the date of authorisation.

As soon as ASIC has processed the transaction (which is immediately in most cases).

The relevant provider must be registered.

By using ASIC Connect to register the relevant provider.

As soon as possible after ASIC has been notified of the authorisation, but before the relevant provider provides personal advice.

Note: From 1 February 2024 all relevant providers, except provisional relevant providers, must be registered to provide personal advice.

Once the relevant provider’s registration is recorded on the Financial Advisers Register.

 

Important

Relevant providers already listed on the Financial Adviser Register (FAR) still need to be registered under this new requirement. AFS licensees must separately apply to register the relevant providers that they authorise using ASIC Connect.

What happens if I’m not registered by 1 February 2024?

From 1 February 2024, unregistered relevant providers who provide personal advice to retail clients on relevant financial products, and the AFS licensee(s) that authorised the relevant provider at the relevant time, will be breaking the law.

The relevant provider will be in breach of a restricted civil penalty provision and may be subject to regulatory action. The relevant provider’s authorising AFS licensee(s) will have committed an offence of strict liability and contravened a civil penalty provision. The AFS licensee(s) may be subject to regulatory action if they continue to authorise the relevant provider at the time they provide the advice.

Further information

This month, ASIC hosted two webinars to provide more information to AFS licensees and Relevant Providers about the new registration requirement - Overview of the registration requirement and Practical guide on how to register a Relevant Provider, which will be made available on this ASIC website in due course.

For more detailed information, refer to Information Sheet 276 and 277 available on the ASIC website.

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