Reforms will be made to the Corporations Act 2001 to three areas:
- 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)
- Ensure that only fees for one-off financial advice can be deducted out of MySuper accounts (rec.s 3.2 and 3.3)
Treasurer Josh Frydenberg said the reforms are aimed at strengthening the financial advice sector and providing consumers with better access to affordable and high-quality financial advice.
The government stated the reforms will streamline 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.
The changes come after 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 found most Australians do not access financial advice at retirement due largely to the cost of advice and a lack of consumer trust.
The recommended changes to 2.10 of the FSRC will call for a single, central disciplinary body to be established for financial advisers. To do this the government is planning to expand the operation of the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investment Commission (ASIC).
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.
With this change, ASIC will 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 also plans to 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.
