A Guide to ASIC Professional Standards for AFSL Holders & Relevant Providers

Introduction

Following the Royal Commission, the Australian Securities and Investments Commission (ASIC) has implemented significant reforms to the professional standards for financial advisers, officially termed “relevant providers.” These changes, governed by the Corporations Act 2001 (Cth), aim to elevate the quality of financial advice by increasing the accountability of both the individual adviser and the Australian Financial Services Licence (AFSL) holder that authorises them.

For any AFSL licensee, navigating this reformed landscape is critical. A central component of these reforms is a mandatory registration process, which took effect in February 2024, requiring the licensee to formally vet and make specific declarations about each adviser’s qualifications and their status as a fit and proper person. This guide provides essential information for compliance officers, responsible managers, and HR teams to understand and manage these enhanced obligations.

The New Registration Framework & AFS Licensee Obligations

The Authorise, Appoint & Register Model

Since 16 February 2024, the onboarding process for relevant providers under an AFSL shifted from a two-step to a mandatory three-step sequence.

Previously, licensees would:

• Authorise an individual to provide advice on their behalf, typically through a written notice or employment contract.
• Appoint the adviser to the Financial Advisers Register (FAR) by notifying ASIC within 30 business days of authorisation.

Under the new framework, licensees must still complete these first two steps, but now must also:

• Register the adviser with ASIC via a separate application lodged through ASIC Connect.

This registration is a distinct, formal step that must be completed before the adviser can legally provide personal advice to retail clients. The process requires the licensee to make specific declarations about the adviser’s:

• Fitness and propriety
• Compliance with professional standards

Only after registration is confirmed on the FAR can the adviser commence providing advice. This change effectively transforms the licensee’s role from a simple notifier to an active gatekeeper, responsible for ensuring advisers meet all regulatory requirements before they begin practice.

Strict Liability & Unauthorised Practice Risks

The introduction of the registration step brings significant legal consequences for licensees. Authorising an adviser to provide personal advice without completing their registration is a strict liability offence.

This means:

• The licensee is liable regardless of intent or knowledge if an unregistered adviser provides personal advice
• The offence is separate from other civil penalty provisions and carries serious regulatory risks

Moreover, the registration status on the FAR is now the definitive public record of an adviser’s legal authority to practice.

Licensees must ensure that:

• Advisers are registered before providing any advice
• The FAR is kept accurate and up to date, including promptly updating any changes in adviser status

Failure to comply can result in penalties, enforcement action, and reputational damage. The strict liability nature of the offence means that even administrative oversights, such as delays or errors in registration, can expose licensees to significant risk.

Licensees should implement robust internal processes to monitor adviser registration status continuously, especially when advisers change licensees or cease authorisation. Since registration ceases immediately upon the end of authorisation, licensees must ensure no adviser provides advice without current registration under their AFSL.

Enhanced Vetting & The Fit & Proper Declaration Process

The Dual Declaration System for Fit & Proper Declarations

The registration of relevant providers with ASIC requires a two-part declaration process that is central to the enhanced vetting framework:

1. First, the relevant provider must submit a written declaration to their AFSL licensee, affirming that they are a fit and proper person to provide personal advice to retail clients on relevant financial products.
2. Second, the AFSL licensee must make a formal declaration to ASIC during the registration application.

The licensee’s declaration includes confirming they have received the provider’s fit and proper declaration and stating whether they are aware of any reason why the relevant provider may not be fit and proper.

If the licensee has not received the provider’s declaration, the registration application cannot proceed. Similarly, if the licensee is aware of any disqualifying factors, they must disclose this in the application, although such disclosure does not automatically prevent registration.

Key Factors in the ASIC Fit & Proper Person Test

When assessing whether a person is fit and proper to provide personal advice under an AFSL, ASIC requires licensees to consider a comprehensive set of factors. These factors extend beyond the traditional “good fame and character” test to include a broader range of regulatory, financial, and legal considerations.

The mandatory factors include whether the person has:

Factor Category	Specific Consideration
Licensing & Registration	Has the person had an AFSL, Australian Credit Licence (ACL), or a registration under the National Consumer Credit Protection Act 2009 (Cth) suspended or cancelled?
Banning & Disqualification	Has the person been subject to a banning or disqualification order under Division 8B of Part 7.6 of the Corporations Act 2001 (Cth) or under Part 2-4 of the National Consumer Credit Protection Act 2009 (Cth)?
Corporate Management	Has the person been disqualified from managing a corporation under the Corporations Act 2001 (Cth) or other Commonwealth or state laws?
Credit Activities	Has the person been banned from engaging in credit activities under state or territory laws?
Dispute Resolution	Has the person been linked to a refusal or failure to give effect to a determination made by the Australian Financial Complaints Authority (AFCA)?
Insolvency	Has the person been an insolvent under administration?
Criminal Record	Has the person been convicted of an offence in the past 10 years?
Regulatory Instruments	Has the person been the subject of an instrument or received an infringement notice from the Financial Services and Credit Panel (FSCP) within the last 10 years?
Other Matters	Has the person been involved in any other matters prescribed by the Corporations Regulations 2001 (Cth)?

Licensees must consider all relevant information they hold about the provider at the time of making their declaration. This includes information obtained through background checks, reference checks under ASIC’s Reference Checking and Information Sharing Protocol, and any other due diligence processes.

Professional Standards Declarations for ASIC Registration

The Qualifications Standard & 2026 Deadline

To meet the qualifications standard under section 921B(2) of the Corporations Act 2001 (Cth), a relevant provider must hold an approved bachelor’s degree or an equivalent qualification approved by the Minister.

Licensees have important verification responsibilities, including:

• Confirming that the education provider, degree name, and course code match exactly with those listed in Schedule 1 of the Corporations (Relevant Providers Degrees, Qualifications, and Courses Standard) Determination 2021 (Cth)
• Verifying completion dates align with official records
• Ensuring advisers complete an approved ethics for professional advisers bridging unit, unless exempt

Existing providers have until 1 January 2026 to comply with this standard. Failure to meet the qualifications standard by this deadline results in the automatic cessation of their authorisation to provide personal advice.

To regain authorisation, such providers must either:

• Complete the approved degree, or
• Qualify via the experienced provider pathway, which requires a written declaration confirming eligibility

Licensees must carefully assess and document the qualifications of each relevant provider before lodging registration applications with ASIC. ASIC has emphasised the importance of accurate reporting, warning that misrepresenting qualifications or incorrectly marking bridging courses as approved degrees is a serious compliance breach.

Accessing the Experienced Provider Pathway

The experienced provider pathway offers an alternative route to meeting the qualifications and professional year standards for advisers with significant prior experience.

To qualify, an adviser must have:

Requirement	Detail
Experience	At least 10 years (3,650 cumulative days) of authorisation as a relevant provider between 1 January 2007 and 31 December 2021.
Disciplinary Record	A clean disciplinary record as at 31 December 2021, meaning no bans, disqualifications, or enforceable undertakings.

Professional Year Requirements for New Providers

The Professional Year Plan & ‘s Role

For new entrants into the financial advice industry, developing a comprehensive Professional Year Plan is a collaborative process. This plan must be created jointly by:

• The AFSL licensee
• The supervisor
• The person undertaking their professional year

This written plan, governed by the Corporations (Work and Training Professional Year Standard) Determination 2018 (Cth), serves as a formal roadmap for the entire training period and must be followed diligently.

The Professional Year Plan must detail several key elements:

Plan Component	Required Details
Identification	Clearly identifies the person undertaking the professional year, their supervisor(s), and the responsible licensee.
Timeline	Outlines the specific period of the professional year and each of its four quarters.
Outcomes	Defines the work and training outcomes to be achieved during each quarter and for the year overall.
Resources	Describes the resources and opportunities the licensee will provide to support the individual.
Activities	Details the specific work activities and structured training planned for each quarter.

Supervisors play a pivotal role in this process. They must be relevant providers with at least two years of experience (not including their own professional year). Additionally, clients who interact with individuals undertaking their professional year must be informed in writing of:

• This fact
• The name and contact details of the supervisor

Ultimately, the licensee holds responsibility for ensuring appropriate supervision and access to necessary resources for meeting plan requirements.

The Four Quarters of Work Activities & Structured Training

The professional year is a one-year, full-time equivalent program comprising a minimum of 1,600 hours. This breaks down into:

• 1,500 hours of work activities
• 100 hours of structured training

The program is divided into four distinct quarters, each designed to transition the new entrant from direct to indirect supervision.

Work activities for each quarter build sequentially:

Quarter	Key Work Activities & Supervision Level
Quarter 1	Focus on Observation (Direct Supervision): The individual shadows their supervisor and experienced advisers in client meetings, completes post-meeting documentation, and participates in back-office activities.
Quarter 2	Direct Client Engagement (Direct Supervision): The individual prepares for and conducts client meetings and drafts key documents like Statements of Advice.
Quarters 3 & 4	Transition to Indirect Supervision (Post-Exam): The individual models strategies, researches products, prepares client documentation with less oversight, and identifies and resolves at least two ethical dilemmas.

Structured training must be separate from work activities and can include formal education that is measurable and assessed. This may involve:

• Completing an approved ethics bridging unit
• Undertaking courses to achieve a professional designation
• Gaining accreditation in specific financial products like self-managed superannuation funds

Record-Keeping & ASIC Notification Obligations

Meticulous record-keeping is mandatory for all parties involved in the professional year.

The individual undertaking training must maintain:

• An accurate logbook detailing hours spent on work activities and structured training
• Records of the nature of those activities
• Documentation of client notifications

The supervisor is responsible for:

• Verifying the logbook’s accuracy
• Keeping their records of assessments

The AFSL licensee has significant record-keeping and notification duties, including:

• Maintaining complete records detailing reasons for being satisfied that requirements have been met for issuing a completion certificate
• Conducting an audit of at least five client files the individual worked on before issuing a final completion certificate
• Keeping all professional year records for a minimum of seven years

While licensees aren’t required to notify ASIC when a professional year begins, they must notify the regulator at two key milestones:

1. When a person becomes a ‘provisional relevant provider’ (at the start of Quarter 3) by:
   • Appointing them to the FAR
   • Providing ASIC with the professional year start date
2. Within 30 business days of the professional year’s completion by:
   • Updating the individual’s role on the register from ‘provisional relevant provider’ to ‘relevant provider’

Ongoing AFSL Compliance Obligations

Continuing Professional Development (CPD) Requirements

Once a relevant provider is registered, AFSL licensees must ensure they meet ongoing Continuing Professional Development (CPD) obligations. Advisers need to complete a minimum of 40 hours of CPD each year, strategically distributed across specific knowledge areas, to ensure well-rounded professional growth.

The annual 40 hours must be allocated according to these minimum requirements:

CPD Knowledge Area	Minimum Annual Hours
Technical Competence	5 hours
Client Care and Practice	5 hours
Regulatory Compliance and Consumer Protection	5 hours
Professionalism and Ethics	9 hours

As a licensee, you play a crucial role in this process. You are responsible for developing a CPD policy and approving at least 70% of the CPD activities undertaken by your advisers. This oversight ensures the training is relevant, high-quality, and aligns with both the adviser’s development needs and your licence obligations.

Maintaining the Financial Advisers Register

AFSL licensees have a strict legal obligation to ensure information for their relevant providers on the FAR remains accurate and current. The FAR serves as the public’s primary tool for verifying an adviser’s status, and ASIC relies on its data for monitoring and enforcement activities.

You must notify ASIC of any change to a relevant provider’s details within 30 business days. This includes updates to:

• Names
• Contact information
• Qualifications
• Authorisations

ASIC has recently conducted compliance checks and issued warnings about the high rate of errors on the register, signalling an increased focus on data integrity. It’s important to note that knowingly providing false or misleading information to be placed on the register is considered a serious offence.

Tax (Financial) Advice Service Qualifications

If a relevant provider under your licence provides tax (financial) advice, they must meet specific additional standards by becoming a Qualified Tax Relevant Provider (QTRP). This requirement can be satisfied if the adviser is:

• A registered tax agent with the Tax Practitioners Board, or
• Has completed specified courses in commercial law and taxation law

A critical deadline is approaching for existing providers who have been operating under a temporary exemption. These advisers must complete the required commercial law and taxation law courses by December 31, 2025. Failure to meet this deadline will result in them no longer being permitted to provide tax (financial) advice services from that date.

As a licensee, you must declare whether your advisers will provide this service and ensure they meet the QTRP requirements before they do so.

Conclusion

ASIC’s enhanced professional standards, effective from February 2024, mandate a rigorous “authorise, appoint, and register” process, placing direct responsibility on AFSL holders to vet each adviser’s qualifications and fitness to practice. This requires licensees to manage comprehensive obligations, from overseeing professional year programs and ongoing CPD to ensuring the accuracy of the FAR and meeting the critical 2026 education deadline.

Navigating these complex requirements demands expert guidance and robust internal processes. For specialised compliance support designed to turn these regulatory challenges into strategic opportunities, contact the experts at AFSL House today to ensure your framework is not just compliant, but a strategic asset ready for ASIC’s heightened scrutiny.

Frequently Asked Questions(FAQ)