The Morrison Government is committed to strengthening and streamlining oversight of the financial advice sector to provide consumers with better access to affordable and high quality financial advice.
The financial advice sector has been undergoing a period of significant change as the Government delivers recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (FSRC). To assist with this transition, the Government will create a regulation that will lower compliance costs for generating fee disclosure statements in the transition year, streamlining processes for licensees and advisers.
As part of delivering Recommendation 2.1 of the FSRC, from 1 July 2021 the financial advice industry is required to report the fees paid under an ongoing fee arrangement and provide a reasonable estimate of the fees that will be paid in the subsequent 12 months. Financial advisers can issue this fee disclosure statement anytime between 1 July 2021 and 30 June 2022 and the date of issue will become the anniversary date for future fee disclosure statements.
The Government is aware that industry may have difficulties generating an accurate fee disclosure statement during the transition period of 1 July 2021 to 30 June 2022 as fees are required to be reported up to the day before the statement is issued.
To address circumstances where advisers are unable to report actual fees in the required time, the Government will make a regulation to allow financial advisers to report an estimate of fees for the 60 days prior to the statement being issued. The estimate would be reported alongside the actual fees charged for the remainder of the previous 12 months.
This regulation will only apply for the transition period. After the transition period, financial advisers will have 60 days from the anniversary date to issue their fee disclosure statements which must report all fees paid in the previous 12 months.
The Government will continue to work constructively with industry to provide an enhanced regulatory framework for financial advice that reduces costly red tape on industry and maximises outcomes for consumers.
The regulation will be made by 1 July 2021.