“Where an adviser fails to pass the exam by the due date they must advise their clients that they are no longer able to provide advice,” ASIC said. 

“In some cases, an adviser may help clients move to a new adviser. In other cases, it will be up to clients who want financial advice to find an adviser who has passed the exam.”

The regulator pointed to the extension given by financial services minister Jane Hume for advisers who had previously failed the exam multiple times as a potential option for self-licensed practitioners.

“The law has the effect that if an adviser has not passed the exam by 31 December 2021 (or 30 September 2022 if they qualify for the extension) they must not provide personal advice to retail clients,” ASIC said.

“On 24 June 2021, the minister announced an extension of the exam deadline to 30 September 2022 for those advisers who have failed the exam twice prior to 1 January 2022.”

Earlier in August, FASEA announced that almost 15,000 advisers, or just under 70 per cent of the adviser register, had so far passed the exam out of a total of 16,700 who had sat it.

“The high pass rate reflects that the exam is an achievable exam for competent relevant providers regardless of their area of specialisation,” the standards authority said.

However concerns have been raised about advisers who fail to scrape in under the wire of the exam deadline, with the AFA saying a grace period should be considered to protect the clients of those who fail to pass.

“What are we going to do to protect the clients who might all of a sudden lose access to advice, and equally what can we do to make sure those advisers can exit their business in a graceful way, to avoid a fire sale or in effect being forced to hand their business back to their licensee and turn off client arrangements?” the association’s acting chief Phil Anderson said in June.