Whether you are an RFA or an AFA you have an obligation under the law to be competent to offer the advice you do.

Let’s assume you were 100% competent on January 1, 2013. All was well.

Now consider all the changes that happened during the year – there were at least 28 life and personal lines insurance products affected by changes. Some providers updated documents for every product in their range.

It is true that some of the changes were minor, but many were not.

In fact 2013 was notable for the number of revisions to heart-disease and cancer definitions in Trauma, for example, by several large providers of popular products. Sovereign’s introduction of severity-based trauma is the most significant example – a completely new product.

Substantial changes to income protection policies, business policies, and TPD also occurred. I am not even including pricing and regulatory updates.

If you offer advice on these products you would need to keep up to date with what is happening.

If you don’t then you could be accused on not acting with reasonable care, diligence and skill.

That applies as much to products that you choose not to recommend as those you do, if you express an opinion on them. So for example, if you recommend that clients do not buy severity-based trauma you are still expressing an opinion on it.

So you need to have competence. You could demonstrate this with your own efforts: read up a lot, network with advisers in Australia that have had similar products for several years, and so on. It is just harder to prove should there be an issue that you are competent than by pointing to a schedule of training over the year from third-party providers.

Of course the problem is that there isn’t much training specific to these products.

The bigger problem is that there is about to be a lot less.

Insurers themselves are the ones most interested in their products and they like to run training sessions.

RFAs have no specific continuing professional development requirements except as members of a professional body. But they are still bound by the requirement to have reasonable care, diligence, and skill.

A good guide to what is reasonable is the AFA code requirements for continuing professional development. The new, proposed, requirements would make training offered by the insurer no longer count because it isn’t sufficiently independent.

Advisers who want to meet these professional standards will have to ask themselves: how am I going to get 15 structured hours of training on insurance products?

For insurers launching innovative new products they will in future have to consider how they can get someone else to offer training on those products. Otherwise no competence means no advice, which means no sales.