The Morrison Government is implementing further reforms to strengthen the financial advice sector and provide consumers with better access to affordable and high quality financial advice.
Today, legislation was introduced into the Parliament that addresses four recommendations from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (FSRC) relating to financial advice. These reforms:
- Strengthen and simplify the ongoing fee arrangement framework in the Corporations Act 2001 to minimise the risk that these types of arrangements give rise to fee for no service conduct (rec. 2.1);
- Amend disclosure requirements to ensure that financial advisers disclose whether they are independent (rec. 2.2); and
- Ensure that only fees for one-off financial advice can be deducted out of MySuper accounts (rec.s 3.2 and 3.3).
Following consultation on these recommendations, the Government has streamlined the approach to implementation to avoid duplication with existing requirements, minimise compliance costs for financial advisers and their clients and ensure all superannuation members are able to access financial advice and pay for that advice from their superannuation.
Simplifying the regulatory framework applying to financial advisers
The Government supports a well regulated and vibrant financial advice sector. As the Retirement Income Review found, the provision of quality financial advice and assistance is important to helping Australians make better informed decisions about the use of their savings in retirement.
The Review also found that most Australians do not access financial advice at retirement due largely to the cost of advice and a lack of consumer trust.
To this end, the Government will further strengthen oversight of financial advisers while at the same time simplifying the regulatory framework governing the provision of financial advice, helping to reduce complexity and cost for advisers.
Specifically, recommendation 2.10 of the FSRC called for a single, central disciplinary body to be established for financial advisers.
The Government will give effect to this recommendation by expanding the operation of the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investment Commission (ASIC).
The FSCP currently supports ASIC in the exercise of its regulatory functions with respect to the making of banning orders against individuals for misconduct.
Expanding the role of the FSCP will leverage its extensive expertise and existing governance structures, avoiding the need to establish a new body to perform this role.
Consolidating this new function within ASIC will also avoid regulatory overlap and minimise the possibility of multiple investigations by multiple agencies into the same conduct related to the provision of financial advice.
The Government will also move the standard-making functions of the Financial Adviser Standards and Ethics Authority (FASEA) to Treasury, with the standards to be set by legislative instrument. Remaining elements of FASEA’s role, including administering the adviser examination, will be incorporated into the FSCP’s expanded mandate.
These reforms will further streamline the number of bodies involved in the oversight of financial advisers, resulting in FASEA being wound up.
The Government would like to acknowledge the important contribution made by the Board and staff of FASEA towards improving the education, training and ethical standards in the financial advice sector.
Legislation implementing these reforms is intended to be introduced into Parliament in the first half of next year.
Treasury and ASIC will work closely with FASEA to ensure an orderly transition to the new regulatory framework.
The Morrison Government is committed to continuing to improve the regulatory framework applying to the financial advice sector and ensuring that Australians can get access to affordable advice to help them plan for their future.