The financial advice sector is about to get a shake-up after years of being dogged by scandals that have caused thousands of mum and dad investors to lose their savings.
The Turnbull government has introduced a suite of measures to parliament aimed at improving the professional standards of financial advisers through better education, training and ethical standards.
Advisers will be required to hold a degree, undertake a professional year, pass an exam, undertake continuous professional development and comply with a code of ethics.
Financial Services Minister Kelly O'Dwyer said existing requirements had allowed some to become qualified to provide financial advice to people after only four days of training.
"The government's reforms will significantly increase the education, training and ethical standards of financial advisers," she told parliament on Wednesday.
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From January 1, 2019, advisers entering the industry will be required to hold a relevant degree.
Existing advisers will have two years, until January 1, 2021, to pass the exam, and five years to meet education requirements.
This may need to be done on a part-time basis as they continue to service existing clients.
The government is also establishing an industry funded, independent standards body to administer the new regime from 2019.
It will be responsible for developing and setting the industry exam, developing the code of ethics and setting education requirements in line with international best practice,
It will also work with education providers to establish appropriate courses.
"These reforms will deliver significant benefits to consumers by building trust and confidence in the financial advice industry," Ms O'Dwyer said.
The banking industry believes the new legislation will turn financial advice into a trusted profession.
Australian Bankers' Association executive director for retail policy Diane Tate said banks were fast tracking funding to set up the new standards body.
Banks recognised the need to improve the conduct and culture of financial advice to deliver better outcomes for customers.
"Many Australians rely on financial advice to help them get the most out of their money, whether they're building up wealth or in retirement," Ms Tate said in a statement.
