We previously reported on the Coalition Government’s plan to roll back the regulation of the financial services industry and theCorporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 (Cth) ("Bill") introduced into Federal Parliament on 19 March 2014. The Government has since registered the Corporations Amendment (Streamlining Future of Financial Advice) Regulation 2014 (Cth) ("Regulations"), which commenced on 1 July 2014.
The Regulations impose a number of changes, including:
- amending the application of the ban on conflicted remuneration;
- changes to the best interests duty (including removing the “catch-all” from the list of steps an adviser must take to satisfy their obligations); and
- winding back advisers’ ongoing fee obligations (including removing the need for opt-in notices and annual fee disclosure statements for existing clients).
The Regulations aim to make interim changes until the Bill is passed and receives Royal Assent. They were tabled in the Senate on 11 July 2014; however, a motion to disallow the Regulations was defeated after an agreement was reached between the Coalition and the Palmer United Party.
Under the agreement, the Coalition has committed to additional consumer protection measures, including:
- requiring advisers to act in the best interests of their clients and prioritise their clients’ interests ahead of their own;
- allowing a 14 day cooling-off period in which clients can return financial products; and
- allowing clients to change instructions to their adviser (for example, if their circumstances change).
The Coalition agreed to establish an advanced public register of financial advisers. An industry working group has already been established to consult with relevant stakeholders.
To view our previous report, click here.