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Better Advice Bill introduced into Australian Parliament

Chris Hamblin, Editor, London, 28 June 2021

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The Morrison Government of Australia is introducing further reforms to the financial advisory sector by fulfilling recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

In its recommendation, the Royal Commission called for a single disciplinary body for financial advisors, insisting that everyone who provides personal financial advice to retail clients should be registered.

The Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill proposes to:

  • expand the job of the Financial Services and Credit Panel at the Australian Securities and Investments Commission to make it the single disciplinary body for financial advisors "to ensure that less serious misconduct does not go unaddressed";
  • create additional penalties and sanctions for financial advisors who have neglected their duties outlined in the Corporations Act (at the moment the authorities can only ban a financial advisor);
  • introduce a new registration system; and
  • transfer functions from the Financial advisor Standards and Ethics Authority (FASEA, which is to be wound up) to ASIC (which will administer the advisors' examination) and to the minister responsible for administering the Corporations Act (who will issue the standards).

In addition, tax (financial) advisors are no longer to be regulated by the Tax Practitioners Board but instead will be regulated only under the Corporations Act 2001.

The Bill also intends to allow the minister to extend the cut?off date beyond which certain existing financial advisors have to pass the examination. The Government will use the power to extend the cut?off date to 30 September 2022 for advisors who have attempted the exam twice prior to 1 January 2022.

Parliament has already passed the Financial Regulator Assessment Authority Bill - which awaits Royal Assent - to please the Royal Commission. Under it, the Government will set up a new Financial Regulator Assessment Authority (FRAA) to keep an eye on the effectiveness and capability of ASIC and the Australian Prudential Regulation Authority (APRA). ASIC will be first in the authority's sights. As is often the case with such state-funded, state-appointed bodies, the Government is claiming - none too convincingly - that the new body will be "independent."

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