There is a new CPD Sheriff in town for advice licensees. So, what are the new rules? And how do we transition?
Submissions to FASEA’s Consultation Paper 6: Continuing Professional Development (CPD) closed on 31 August 2018.
On Friday night FASEA released its Standards Summary which included revised guidance on CPD.
Whilst this is not yet set in stone, there are things that advice licensees can do to prepare for the new regime, including understanding what is proposed.
What is an advice licensee?
Advice licensee is the new ASIC term for an Australian Financial Services licensee who falls under FASEA supervision. Advice licensees have financial advisers who give personal advice to retail clients.
What CPD requirements have been proposed by FASEA?
- Each adviser is recommended to complete 40 CPD hours annually, 70% of which must be approved by the advice licensee
- 25 CPD hours can be claimed through formal relevant education (such as bridging courses or approved relevant degree studies)
- 4 CPD hours can be claimed for professional or technical reading
- FASEA has introduced new CPD categories:
- Technical competence – we interpret this as aligning with ASIC specialist knowledge areas, although this is unclear in current draft
- Client care and practice – largely adviser skills and practice management
- Regulatory compliance and consumer protection – likely regulatory updates and compliance with laws and other licensing obligations
- Professionalism and ethics – conduct management, ethics and possibly leadership training. Professionalism and ethics is given a great deal of emphasis with a minimum of 9 CPD hours being prescribed per year.
- Other adviser/licensee selected CPD - conferences, PD days, professional or technical reading and other qualifying CPD.
- This means adherence to the new CPD regime starts from 1 January 2019 if your CPD year is a calendar year (1 January - 31 December). Transition arrangements for 2019 will be on a pro-rata basis for licensees whose CPD year is not a calendar year.
What does ASIC require from advice licensees?
Advice licensees must inform ASIC of the start date of their CPD year during a specified notice period, i.e. between 15 November 2019 and 31 December 2019.
How will financial advisers meet the CPD requirements and study to meet the new standards?
The majority of relevant providers (advisers) will only require 15 additional hours of CPD. This is because they will be undergoing some kind of formal relevant education.
And with up to 4 hours of CPD able to be claimed through professional or technical reading (if approved by licensee), and the likes of conferences and PD days, it seems that advisers will only need some topping up of their CPD over this period.
Our recommendations and tips for advice licensees
- Look out for the next FASEA instalment on CPD – they will provide a PD activity report and professional development plan template
- Get your house in order with regard to CPD:
- Make sure your CPD start date is recorded; formally establish one if it’s unclear
- Understand your CPD needs for next year – you may not need a subscription to a large catalogue. Identify training, conferences, and other PD that is already in place and categorise any gaps. You may have a year or two where you simply need to top up advisers’ targets with packages or clusters of CPD that focus on a particular FASEA target area.
- Ensure your CPD provider has a plan for transitioning from ASIC knowledge areas to FASEA CPD categories – or for aligning content to both schemes.
Our final thoughts
The incoming changes present opportunity to evaluate whether your current provider is facilitating the learning outcomes you’re after. Consider switching or experimenting with multiple providers until you’re satisfied with the volume and quality of the learning.
Don’t just tick boxes. Your CPD is actually a way to boost your advisers’ and practice’s capability and to attract and retain talent.
Getting a grip on CPD doesn’t have to feel like the Wild West. With a little pre-planning you can put your homestead in order and spur on your team for both client and adviser benefit.
Since you’re here, you’re welcome to check out our CPD and CPD short courses.
FASEA's Standards Summary
FASEA's Consultation paper 6: CPD