The Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 and the Corporation (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 recently were introduced into Australia’s parliament and would impact superannuation and financial advice providers. These bills are part of the Financial Services Royal Commission’s recommendations, but do not include limiting the payment of financial advice fees from superannuation accounts (the government has indicated that legislative proposals could be published before the end of 2020).
Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 highlights
- Strengthen curbs on the unsolicited selling of all financial products — including superannuation and insurance — to consumers. The proposed effective date is 5 Oct 2021.
- Classification as a ‘financial service’ of the handling and settlement of insurance claims, requiring relevant providers to meet licensing and other standards aimed at improving claims handling practices. The measure does not include superannuation insurance claims; however, corresponding obligations would be imposed more widely on superannuation trustee services under separate provisions of the bill. The proposed effective date is 1 Jan 2021, or the day after Royal Assent.
- Adjustment of the roles assigned to the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission (ASIC), including expanded powers for ASIC to take regulatory action against poor conduct and consumer outcomes in relation to superannuation.
- Prohibition of superannuation fund trustees from having a duty to act in the interests of another person. This aims to prevent Super trustees from acting as ‘responsible entities’ of managed investment schemes, but it would not include individual trustee directors or subsidiaries of trustee entities. The proposed effective date is 1 Jul 2021.
- Provisions to enforce the financial services industry codes, including the possibility of civil penalties for noncompliance. Mandatory financial codes could be established by regulation. The proposed effective date is 1 Jan 2021, or the day after Royal Assent.
- Expand the provisions for reporting breaches and requirements for financial advice misconduct investigation, reporting and remediation. The measures generally would apply from 1 Oct 2021.
Corporation (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 highlights
- ASIC could charge a fee for an entity’s application for exemption from the deferred sales model for the sale of add-on insurance products to be implemented under the Financial Sector Reform Bill.
- Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 (Parliament of Australia, 12 Nov 2020)
- Corporations (Fees) Amendment (Hayne Royal Commission Response) Bill 2020 (Parliament of Australia, 12 Nov 2020)
- Financial Services Royal Commission Implementation Roadmap (Australian Government, 19 Aug 2020)