Treasury prepares “unprecedented” advice overhaul

Speaking at the Victorian Chamber of Commerce Breakfast in Melbourne, Treasurer Josh Frydenberg unveiled the Government’s “Implementation Roadmap” for delivering on its response to the Royal Commission.

Frydenberg said the roadmap “represents the largest and most comprehensive corporate and financial services law reform process since the 1990s when the Corporate Law Economic Reform Program began,” and involves not just acting on all 76 recommendations made in the final Hayne report, but “[promises] to go further, making an additional 18 commitments.”

Additional commitments

According to Frydenberg, these commitments include extending design and distribution obligations to a wider range of financial products, reviewing coordination and funding of financial counselling services and extending AFCA’s remit to complaints dating back to 1 January 2008.

“The Government has also committed to implementing four additional measures to strengthen ASIC’s enforcement powers,” Frydenberg continued, “as recommended by the ASIC Enforcement Review Taskforce in 2017.”

Let’s look at what the roadmap has in store for the advice industry:

Reforms for advisers

We’ve previously discussed how the Coalition has introduced legislation to end grandfathered commissions by 2021, but the roadmap goes further in explaining how the Government will act on the Royal Commission’s recommendations.

Critically, it details the new disciplinary system for financial advisers, which it says “will include a single, central disciplinary body.”

“The new body,” it continues, “will be responsible for the registration, monitoring and sanctioning of financial advisers. This Royal Commission recommendation builds on the Government’s professional standards reforms to raise the educational, training and ethical standards of financial advisers.

“The Government will proceed with monitoring of the Code of Ethics introduced as part of those reforms, which require financial advisers, from 15 November 2019, to subscribe to a code monitoring body that will enforce the Code of Ethics from 1 January 2020.”

What about the regulators?

As per the roadmap, the Government will also reform breach reporting arrangements “as recommended by the ASIC Enforcement Review.”

“These changes,” the report continues, “will be done together with the Royal Commission recommendations to require financial services and credit licensees to increase information-sharing and reporting obligations and take action to detect misconduct and, where appropriate, remediate customers for misconduct by financial advisers and mortgage brokers.”

The roadmap adds that the Government “will also implement the other recommendations of the Enforcement Review relating to banning, licensing, search warrants, access to telecommunications intercepts and providing ASIC with a directions power.”

Finally, a financial regulator oversight authority will be introduced to “ensure that ASIC’s and APRA’s effectiveness in delivering on their mandates is subject to consistent and ongoing independent assessment. The authority will undertake an assessment in three years’ time of the effectiveness of the changes made by the regulators following the Royal Commission.”

You can read the full report here.  

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