Federal Parliament last week cleared the Better Advice Bill, paving the way for the establishment of a single disciplinary body and commencement of other reforms as recommended by the Hayne royal commission.
Peak bodies the Financial Planning Association (FPA) and Association of Financial Advisers (AFA) have welcomed the bill’s passage but maintain they still have concerns over some of the changes that will start next year.
From January 1 the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investments Commission (ASIC) will operate as the disciplinary body for advisers. The body will look into complaints about an adviser’s compliance with the financial services laws and the Code of Ethics.
Other changes to start next year include a new registration system for advisers and responsibility given to ASIC for administering adviser exams as the bill implements the Government’s decision to wind up the Financial Adviser Standards and Ethics Authority (FASEA).
“This legislation is another step forward in implementing the recommendations from the Hayne royal commission and introduces important reforms to strengthen consumer protections while streamlining oversight in the financial advice industry,” a statement from the office of Financial Services Minister Jane Hume said.
The statement says the legislation gives the Government the power to extend the cutoff date for certain existing financial advisers to pass the exam.
“The Government will use the power to extend the cutoff date to September 30 2022 for advisers who have attempted the exam twice prior to January 1 2022,” the statement said.
FPA CEO Dante De Gori says the changes will streamline regulation, ultimately reducing costs to the profession and consumers.
“After eight years of constant regulatory change, financial planners now have the opportunity to focus on their clients and on the challenge of providing financial advice to more Australians without the distraction of constant regulatory change,” he said.
“Whilst this legislation now provides a level of clarity as to who regulates financial planners, there are still outstanding issues that need to be addressed through regulations.
“The FPA will continue to work through these regulations and engage with members and stakeholders to ensure constructive input into the implementation of the reforms, as the Treasury consults on the operation of the FSCP panels at ASIC.”
AFA GM Policy and Professionalism Phil Anderson says the peak body is broadly supportive of the incoming changes but points out it still harbours some concerns in relation to the single disciplinary body.
“We are concerned about ASIC being required to investigate minor breaches of the law, even if they do not choose to refer them to a Financial Services and Credit Panel,” Mr Anderson said.
“This will add unnecessarily to the cost of running the single disciplinary body, which ultimately financial advisers and their clients will need to pay for.”