CPD requirements - Financial Adviser Standards and Ethics Authority (FASEA) and Tax Practitioners Board (TPB)
Background
Continuing Professional Development (CPD) is an integral part of being a professional. Quality CPD or CPE[i] activities can ensure your professional knowledge remains accurate and that you keep up to date with the rapidly evolving financial services profession.
In this article, we summarise FASEA’s CPD obligations for relevant providers and the TPB’s CPE obligations for those representatives who are individually registered as tax (financial) advisers.
Financial Adviser Standards and Ethics Authority (FASEA)
The Corporations Act 2001 requires the “standards body” to set requirements for CPD for each CPD year of a financial services licensee. In June 2017, FASEA was declared as the standards body. All individuals identified as a “relevant provider” must meet the requirements for continuing professional development set by the standards body.[ii] A “relevant provider” is an individual authorised to provide personal advice to retail clients, as the licensee or on behalf of the licensee, in relation to relevant financial products. A financial services licensee's “CPD year” is the 12-month period beginning on the day of the year included in the most recent notice given by the licensee under section 922HA.[iii]
In January 2019, FASEA prescribed CPD requirements for all individuals who are relevant providers.[iv]
FASEA’s CPD policy (Continuing Professional Development for Financial Advisers, FASEA, 2020)[v] details its requirements for CPD training. A summary of the key requirements is set out below.
Develop and maintain a CPD plan
Relevant providers must develop and maintain a CPD plan on a continuing basis. The plan must identify areas for improvement in competence, knowledge and skills and the professional development proposals for making those improvements.
Record CPD activities
Relevant providers must maintain a continuous, up-to-date and accurate record of their CPD activities including evidence of completion of any CPD activity that is intended to be relied on to meet their CPD obligations. Records must be kept for 7 years from the end of each CPD year. FASEA has stated that it encourages relevant providers to use a digital solution to track CPD activities, evidence and outcomes, and it also states that records must be provided to the licensee for it to meet compliance with its CPD year obligations under the Corporations Act (s 922HC).
What activities are required?
The CPD requirements for a relevant provider are shown in the table below.
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Applies to |
Minimum Total Hours |
Additional Criteria |
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Relevant Providers |
40 per CPD year* |
CPD Categories, minimum hours per category: |
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5 hours technical competence; and |
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5 hours client care and practice; and |
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5 hours regulatory compliance and consumer protection; and |
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9 hours in the CPD area of professionalism and ethics. |
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70% of the total minimum hours must be spent on qualifying CPD activities approved by the licensee. |
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A maximum of 30 hours per year may be attributed to formal relevant education which may include any of the following: |
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Degree or equivalent qualification approved under the Corporations (Relevant Providers Degrees, Qualifications and Courses |
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A course determined in a legislative instrument under paragraph 1546B(1)(b) of the Corporations Act; |
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Education or training provided or approved by a professional association; or |
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Formal education or training study towards qualifications or designations relevant to practice as a relevant provider. |
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No more than 4 hours of professional or technical reading. |
* FASEA states that “in special circumstances, if the relevant provider is working part-time for the whole of the CPD year, with the prior written consent of the licensee, they must complete at least 36 hours of CPD activity in each CPD Year”. FASEA does not provide any guidance as to the meaning of special circumstances.
Qualifying Training
In summary, whether CPD is deemed as being qualifying CPD is determined by reference to the substance of the material, the intellectual or practical level of content, the experience of the training provider and whether it is designed to enhance knowledge or skills in areas that are relevant to the provision of financial product advice and financial advice services.
FASEA's CPD areas
FASEA’s CPD policy describes the CPD areas as set out below:
Where qualifying training is not in an area referred to above then these hours may be attributed to a 5th CPD training area which is “General”. There is no specific requirement for CPD hours in this area, but these hours will assist an individual in meeting their total CPD hours requirement. If these hours are approved by the licensee then this will assist the individual in meeting the requirement that 70% of the total CPD hours must be spent on qualifying CPD activities approved by the licensee.
FASEA does not accredit or approve CPD activities. CPD hours awarded for a training activity provided by a recognised training organisation are determined by the providing organisation unless the training activity has been accredited by a professional body in which case the accrediting organisation will determine the CPD hours applicable. A breakdown of the total CPD hours into FASEA’s CPD areas is also usually provided.
Examples of training within FASEA's CPD area
Technical competence would generally include hours relating to ASIC’s RG146 knowledge requirements and TPB’s knowledge requirements so training may include activities such as attending a seminar on taxation of death benefits paid from superannuation accounts.
Client care and practice is focussed on how representatives manage client relationships including how they will ensure clients understand how services are delivered and what they will be charged. Training to improve information gathering techniques or coaching to develop interpersonal skills are activities that may be included in this CPD area.
Regulatory compliance and consumer protection CPD would include training covering relevant laws, policies and regulations that apply to the provision of financial services. Training activities related to the provision of fee disclosure statements and renewal notices may fall into this CPD area.
Professionalism and ethics training may cover a broad range of activities related to acting professionally and acting with integrity and honesty. This CPD area is generally designed to capture training that is related to values that underpin FASEA’s code of ethics. Training that may fall into this CPD area is training related to ASIC's oversight of ethical codes or training on whistleblowing rules and policies.
Formal relevant education
As detailed at item 3 in the table above a maximum of 30 CPD hours per year may be attributed to formal relevant education. The remaining CPD hours must be made up of other activities.
Example: An adviser holds a Diploma in Financial Planning but does not have a degree level qualification. The adviser enrols in a course to obtain a Graduate Diploma in Financial Planning. As the qualification is deemed to be at a higher educational level than a degree this will provide the adviser with the required level of qualification. If the course comprises a number of separate units, and CPD hours are allocated upon completion of each individual unit, it is possible the adviser may obtain more than 30 hours in total from this course. However, the adviser may only count a maximum of 30 hours per CPD year from this Graduate Diploma. CPDhours obtained in a CPD year cannot be counted to any other CPD year so an excess of points in one year cannot be carried over to a later year.
How much CPD is sufficient?
The table above shows the prescribed CPD requirements for a relevant provider in each CPD year, however FASEA’s Code of Ethics standard 10 states that relevant providers “must develop, maintain and apply a high level of relevant knowledge and skills”. This means that a relevant provider must consider whether additional training is required beyond the prescribed CPD requirements. This would be especially the case if a great deal of the training undertaken focused on a particular narrow subject area.
Further, if a relevant provider takes a career break, on his or her return he or she must meet the existing education qualification requirements and if the break is for longer than 2 years he or she must undertake appropriate CPD to ensure upskilling with the latest regulatory and licensee requirements.
Example: An adviser has worked for many years specialising in providing superannuation advice mostly to clients with moderate balances who are some years from retirement. The adviser has completed all his required training for the CPD year even though it is 6 months to the end of the CPD year. The adviser is engaged by anew client who is approaching preservation age and has a balance close to the transfer balance cap. The adviser must consider whether he has the level of relevant knowledge to service the client and he may determine that he needs to undertake additional CPD.
Failure to meet FASEA’s CPD requirements must be notified to ASIC within 30 days of the end of the CPD year and this will be reflected on the financial advisers’register.
Tax Practitioners Board (TPB)
All Australian financial services licensees and their representatives that provide tax (financial) advice services for a fee or other reward must be registered with the TPB.
Examples of tax (financial) advice services
A representative who provides clients with personal advice relating to superannuation and advises clients of the tax effectiveness of making salary sacrifice contributions provides a tax (financial) advice service.
A representative who advises wholesale clients about non-financial products such as real property or collectables including the tax consequences of holding and disposing of those assets provides a tax (financial) advice service.
CPE Requirements
A representative who is individually registered with the TPB is referred to as an “individual tax (financial) adviser” and must maintain knowledge and skills relevant to the services they provide (TASA s 30-10 (8)). TPB requires individual tax (financial) advisers to complete continuing professional education (CPE) that meets the TPB’s requirements as detailed in the TPB (EP) 06/2014.[vi]
The TPB states that representatives who meet FASEA’s CPD minimum hours are likely to also meet the TPB’s requirements provided the CPD activities are relevant to the tax (financial) advice services they provide and do not include undertaking formal qualifications to meet the TPB’s registration requirements.
Where a representative is a member of a TPB recognised professional association and meets the association’s CPE requirements the TPB will accept this as meeting its CPE requirements provided the training is relevant to tax (financial) advice services, is provided by persons or organisations with suitable qualifications and/or practical experience, and no more than 25% of CPE is undertaken through relevant technical/professional reading.
As at June 2020, the TPB recognised tax (financial) adviser associations[vii] are:
What activities are required?
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Applies to |
Minimum Total Hours |
Additional Criteria |
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Tax (financial advisers) |
60 hours per 3 year TPB registration period* |
· Minimum of 7 hours per year |
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· CPE must be relevant to tax (financial) advice services and should be provided by persons or organisations with suitable qualifications and/or practical experience in the relevant subject area. |
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· No more than 25% of CPE should be undertaken through relevant technical/professional reading. (Due to COVID-19 the TPB temporarily removed this cap from 16 March 2020 until 30 September 2020). |
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· Completion of a primary course of education used for the purpose of gaining initial registration as a tax (financial) adviser, or renewing such registration, will not generally constitute a CPE activity. |
*The TPB may impose a “condition” on a representative’s TPB registration limiting the services that they may provide to a particular area of taxation law. This would generally occur if a representative only had qualifications and experience in particular areas of taxation law. Representatives with a condition imposed on their TPB registration must complete a minimum of 5 hours of CPE each year, and 45 hours of CPE within a standard 3-year registration period (TPB (EP) 06/2014).
Example: A newly registered tax (financial) adviser is planning to work in their current role for 12 months before taking a career break of 12 months to travel overseas and is then planning to return to their current role. They must complete 60 CPE hours training over the 3-year period with a minimum of 7 CPE hours each year. They may decide to complete 40 CPE hours in the first 12 months, to complete the minimum permitted 7 CPE hours in the year they are travelling, and to complete the remaining 13 hours in the 3rd year after their return.
Record CPD activities
Individuals must maintain a record of their CPE activities for 6 years unless the individual is a member of a relevant recognised professional association, in which case records should be kept in accordance with their requirements (Continuing Professional Education for Tax (Financial) Advisers, 2020).[viii]
The TPB may request evidence of completed CPE at any time throughout the registration period. The TPB has stated that CPE requirements must be satisfied for renewal of registration to be considered.
Conclusion
This article details FASEA’s requirements for continuing professional development and the TPB’s requirements for continuing professional education. If you are a member of any professional association you may also have CPD obligations specific to your membership of that association.
While many of the CPD requirements of FASEA, the TPB and any professional associations will be shared you must not assume it is sufficient to meet one set of requirements. It is essential to understand the requirements of each entity to ensure that you meet your obligations.
Date of article - June 2020
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[i] Referred to as Continuing Professional Education (CPE) by TPB.
[ii] s 921B(5)
[iii] This means that different AFSLs will have CPD years starting and ending on different dates.
[iv] A provisional relevant provider is not required to meet the continuing professional development standard (s 921D(2)(a)).
[v] Financial Adviser Standards and Ethics Authority Ltd. 2020.Continuing Professional Development for Financial Advisers | FASEA. [online] Available at: <https://www.fasea.gov.au/wp-content/uploads/2019/04/FPS004-CPD-Policy-revised-vFINAL.pdf (https://www.fasea.gov.au/wp-content/uploads/2019/04/FPS004-CPD-Policy-revised-vFINAL.pdf)> [Accessed 10 June 2020].
[vi] Tax Practitioners Board. 2020. Explanatory Paper TPB(EP) 06/2014 | TPB. [online] Available at: <https://www.tpb.gov.au/sites/default/files/tpb_ep_06_2014_cpe_policy_requirements_for_tax_financial_advisers.pdf?v=1499831223 https://www.tpb.gov.au/sites/default/files/tpb_ep_06_2014_cpe_policy_requirements_for_tax_financial_advisers.pdf?v=1499831223)> [Accessed 10 June 2020]
[vii] Tax Practitioners Board. 2020.Recognised Professional Associations | TPB.[online] Available at: <https://www.tpb.gov.au/recognised-professional-associations (https://www.tpb.gov.au/recognised-professionalassociations)> [Accessed 10 June 2020]
[viii] Tax Practitioners Board. 2020. Continuing Professional Education for Tax (Financial Advisers). [online] Available at: <https://www.tpb.gov.au/sites/default/files/de-13308_cpe-factsheet_tfa.pdf?v=1575502616 (https://www.tpb.gov.au/sites/default/files/de-13308_cpe-factsheet_tfa.pdf?v=1575502616)> [Accessed 15 June 2020].