ASIC has divided products into Tier 1 and Tier 2. Tier 2 products are generally simpler and better understood than Tier 1 products and are therefore subject to lighter training standards.
In RG 146 ASIC says it has taken this approach because while Tier 2 products carry certain risks, they:
- are relatively straightforward;
- do not have any investment component;
- are subject to standard terms and conditions except for disclosed variations; and
- are of limited life, often 12 months.
In practical terms, advisers on Tier 1 products are required to have Generic Knowledge plus specialist knowledge about the specific products they advise on and the markets in which they operate. This differs from ASIC’s syllabus for Tier 2 products, which covers only specialist knowledge requirements that are relevant to the adviser’s tasks and specific industry and product/s.
Tier 2 products are deposit products, non-cash payment facilities, and general insurance (other than personal sickness and accident insurance). Most other financial products are Tier 1, such as Securities, Managed Investments, Derivatives, Foreign Exchange, Superannuation, and Life Insurance.
Note that not all licensed financial products are in the RG 146 framework. For details of what financial products are in scope and whether they are Tier 1 or Tier 2, refer to RG 146.
Remember, licensees still have a general obligation to ensure that their advisers have the necessary skills to be competent to provide advice (s912A(f) of the Corporations Act). Studying RG 146 learning is an effective avenue for fulfilling this requirement.