Both the House of Representatives and the Senate have passed the Corporations Amendment (Financial Advice Measures) Bill 2016 which contains changes to the Future of Financial Advice (FOFA) measures in the Corporations Act 2001. The Bill is waiting to receive Royal Assent.
The Bill includes measures relating to:
- the best interests duty as it applies to ADI employees/agents giving advice on basic banking products, general insurance products, consumer credit insurance or a combination of those products;
- the best interests duty as it applies to advice on a general insurance product;
- the period of time an adviser has to provide a fee disclosure statement in the context of an ongoing fee arrangement - extended from 30 days to 60 days;
- the period of time an adviser has to provide a renewal notice (or ‘opt in’ requirement) in the context of an ongoing fee arrangement - extended from 30 days to 60 days;
- clarification that fees paid to an advisor for advice given to a member of a regulated superannuation fund (the trustee pays the fees and recovers the fees from the assets of the fund attributed to the member) is a client-paid benefit and is therefore not conflicted remuneration;
- introduction of ability in specified circumstances to introduce regulations which may prescribe circumstances in which a benefit (monetary or non-monetary) is to be treated as conflicted remuneration;
- broadening of exemption from conflicted remuneration for soft dollar benefits with an education or training purpose - the benefit must be relevant to carrying on of a financial services business (previously, it had to be relevant to the provision of financial product advice to clients);
- exemption for benefits for employees/agents of ADIs for recommending basic banking products, general insurance products, consumer credit insurance or a combination of those products.
While there are no fundamental or structural changes, industry is likely to welcome them.