Explanatory Memorandum
(Circulated by authority of Senator the Hon. Jane Hume, Minister for Superannuation, Financial Services and the Digital Economy, Minister for Women's Economic Security)General outline and financial impact
A new disciplinary system for financial advisers
On 4 February 2019, the Government released its response to the Financial Services Royal Commission entitled Restoring trust in Australia's financial system. The Government's response committed to taking action on the recommendations of the Financial Services Royal Commission.
This Bill implements recommendation 2.10 of the Financial Services Royal Commission, which recommended the establishment of a single disciplinary body for financial advisers and the requirement that all financial advisers who provide personal financial advice to retail clients be registered.
On 27 November 2020, the Government released the Tax Practitioners Board Review Final Report and its response to it. The Government's response supports 20 of the Review's 28 recommendations in full, in part or in-principle.
This Bill implements recommendation 7.1 of the Tax Practitioners Board Review, which recommended that a new model be developed for regulating tax (financial) advisers in alignment with implementing recommendation 2.10 of the Financial Services Royal Commission Final Report.
The Bill also delivers the Government's announcement on 9 December 2020 that it would wind-up FASEA and transfer its standard setting functions to the Minister responsible for the Corporations Act and to ASIC.
The Financial Services Royal Commission Final Report has been certified as being informed by a process and analysis equivalent to a Regulation Impact Statement for the purposes of the Government decision to implement this reform. The Financial Services Royal Commission Final Report and the Regulation Impact Statement certification is available from the Department of Prime Minister and Cabinet website. [1]
The Tax Practitioners Board Review Final Report has been certified as being informed by a process and analysis equivalent to a Regulation Impact Statement for the purposes of the Government decision to implement this reform. The Tax Practitioners Board Review Final Report and Regulation Impact Statement certification is available from the Department of Prime Minister and Cabinet website. [2]
Date of effect: The Bill commences on the day after Royal Assent. The new disciplinary and registration systems for financial advisers apply from 1 January 2022.
Proposal announced: The Government announced its response to the Financial Services Royal Commission on 4 February 2019.
The Government announced its response to the Tax Practitioners Board Review Final Report on 27 November 2020.
On 9 December 2020 the Government announced that, as part of implementing recommendation 2.10 of the Financial Services Royal Commission, it would expand the role of the Financial Services and Credit Panel within ASIC to take on the functions of the single disciplinary body and transfer the functions of FASEA to the Minister responsible for administering the Corporations Act and to ASIC.
Financial impact: Funding for this measure was provided to the Department of Treasury in the 2021-22 Budget. This included $2.5 million in 2021-22 to fund the ongoing operational costs of FASEA and its wind-up costs after its industry funding agreement ceases on 30 June 2021.
Human rights implications: This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 2.
Compliance cost impact: Low compliance cost.