The Morrison Government is introducing further reforms to strengthen the financial advice sector and implement recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Recommendation 2.10 proposed the establishment of a single disciplinary body for financial advisers and that all financial advisers who provide personal financial advice to retail clients be registered.
The Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 will:
- expand the role of the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers to ensure that less serious misconduct does not go unaddressed;
- create additional penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act, reflecting that the current set of sanctions are limited to banning a financial adviser;
- introduce a new registration system for financial advisers to improve the accountability and transparency of the financial services sector; and
- transfer functions from the Financial Adviser Standards and Ethics Authority (FASEA) to the Minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers.
In line with the announcement made on 9 December 2020, FASEA will be wound up and its standard‑making functions moved to be the responsibility of the Treasurer, supported by Treasury. ASIC will be responsible for administration of the adviser exam.
In addition, tax (financial) advisers will no longer be regulated by the Tax Practitioners Board but instead will be regulated only under the Corporations Act 2001. This is consistent with the recommendation made by the Tax Practitioners Board Review.
The Bill will also give the Minister the power to extend the cut‑off date for certain existing financial advisers to pass the exam. The Government will use the power to extend the cut‑off date to 30 September 2022 for advisers who have attempted the exam twice prior to 1 January 2022.
These reforms will further streamline the number of bodies involved in the oversight of financial advisers, delivering improvements to the regulatory framework for the sector and enhanced access to affordable and quality financial advice for Australians.