In early January FASEA finalised a number of the requirements to meet the new Professional Standards that have become effective on 1 January 2019. This is the first article in a small series that I am preparing to assist licensees and advisers in meeting their new requirements. I have selected the update to the CPD requirements as the first article as there is some immediate action required.
Firstly, to address some terminology used in the legislation and by FASEA (the Financial Adviser Standards and Ethics Authority). FASEA differentiates between ‘licensees’ being the AFSL holders and ‘relevant providers’ who are those authorised to provide personal financial planning advice. Relevant providers include employees and authorised representatives.
A relevant provider must ensure they meet the applicable training obligations and the licensee is required to provide guidance to their relevant providers.
What are the new CPD requirements?
The new requirements are to meet 40 hours of CPD per annum with FASEA setting minimum requirements in the following knowledge areas:
1. Technical Competence 5 hours
2. Client Care and Practice 5 hours
3. Regulatory Compliance & Consumer Protection 5 hours
4. Professionalism & Ethics 9 hours
This means that a total of 24 hours have been defined, leaving relevant providers with 16 hours that can be allocated depending on the training needs.
What is considered CPD?
FASEA has been quite broad in its approach to what type of training will be considered CPD, in particular noting the following:
Up to a maximum of 30 hours per annum can be made up of formal study including degree equivalent study to meet legislative requirements – specifically include bridging courses and approved degree courses;
Non formal education including education to achieve professional designations or specific financial advice provision (examples include stockbroking, SMSF, aged care);
Other CPD as approved by the licensee such as conferences, PD Days, online training, etc
Up to a maximum of 4 hours of professional or technical reading.
The training plan should reflect both the requirements and what is considered approved CPD. Licensees and relevant providers have until 31 March 2019 to update their training plans. Please note that 70% of the training must be approved by the licensee.
What are the requirements for licensees?
Licensees are required to support relevant providers in meeting the CPD requirements at a level appropriate for the financial services being provided. Licensees must ensure that their relevant providers meet the relevant CPD requirements are appropriately trained.
For this purpose, licensees must have in place a CPD Policy that outlines the licensee’s CPD expectation, processes and supervision. Licensees must update their CPD Policy by 31 March 2019.
Transitional Considerations
While the new requirements are in force from 1 January 2019, the licensee’s CPD year may be the financial year. If this is the case, FASEA has advised that licensee and relevant providers can meet the requirements over a 18 month period – meaning 60 hours in total from 1 January 2019 until 30 June 2020.
What next?
If you are a licensee, you must update your CPD Policy and Training Plans by the end of March 2019.
Both licensees and relevant providers must ensure that any training completed from 1 January 2019 onwards considers whether it meets any of the training areas specified by FASEA to ensure it counts towards the targets.
Ongoing CPD providers are taking steps to adapt to the new requirements to facilitate the changes. If you have not been provided any information you may wish to contact your training provider to seek an update.
If you require assistance, wish to provide feedback or have any questions, please feel free to contact me to discuss.