Treasury has issued for consultation a draft Financial Sector Reform (Hayne Royal Commission Response -A New Disciplinary System for Financial Advisers) Bill 2021 which expands the role of the Financial Services and Credit Panel (FSCP) within ASIC to operate as the single disciplinary body for financial advisers.
The FSCP will consider conduct and breaches by financial planners or advisers including tax (financial) advisers who are authorised to provide personal advice to retail clients. A person who is giving general advice only will not be subject to the FSCP.
Stockbrokers, actuaries, and insurers are all subject to disciplinary action by the FSCP if they are giving personal advice to retail clients.
An Australian financial services (AFS) licence holder will only be subject to the FSCP where it is also a relevant provider and the breach relates to that person’s conduct as a financial planner or adviser. Otherwise, breaches by a licensee will continue to be dealt with by ASIC.
The Bill requires an adviser to be registered in order to provide personal financial advice and for this registration to be renewed annually.
The draft Bill:
- introduces a single registration and disciplinary system for financial advisers who provide tax (financial) advice services;
- creates new penalties and sanctions which apply to financial advisers found to have breached their obligations;
- introduces a new annual registration system for financial advisers;
- provides for the wind-up of the Financial Adviser Standards and Ethics Authority and the transfer of the functions of that Authority to the Minister responsible for the Corporations Act 2001 and ASIC.
The FSCP will be able to impose a range of administrative sanctions, an infringement notice, or recommend that ASIC commence court proceedings seeking a civil penalty.
Timetable
The Panel will be established by 1 January 2022 (subject to the passage of legislation).
Under the Bill, a licensee can begin registering their existing financial advisers from 1 January 2022 and has until 1 January 2023 to register their financial advisers for their advisers to be able to continue to provide advice.
From 1 January 2023, new advisers cannot begin to provide financial advice until ASIC has confirmed that the adviser has been registered.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
