The Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Bill 2021 has been passed by the House of Representatives and sent to the Senate.

The Senate Economics Legislation Committee’s report has recommended passage of the Bill.

UPDATE: The Bill was passed by the Senate on 21 October 2021 and given Royal Assent on 28 October 2021. It will commence on 1 January 2022.

The Bill:

• appoints the Financial Services and Credit Panel within ASIC to operate as the single disciplinary body for financial advisers;
• creates new penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act;
• introduces a new registration system for financial advisers and introduces a single registration and disciplinary system under the Corporations Act 2001 for financial advisers who provide tax (financial) advice services ; and
• transfers functions from the Financial Adviser Standards and Ethics Authority (FASEA) on 1 January 2022 to the Minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers.

Disciplinary powers
Once the Financial Services and Credit Panel is convened, a panel can:

• give a warning or reprimand;
• make an instrument taking other administrative action; or
• in certain circumstances –issue an infringement notice or recommend that ASIC apply to the court for a civil penalty.

ASIC may make banning orders for serious breaches of the Corporations Act 2001.

Registration of financial advisers
There will be a new two stage registration system for financial advisers:

Stage 1 registration (commences not earlier than 1 January 2022 but no later than 1 January 2023) –
financial services licensees are required to apply to ASIC to register their financial advisers on the the Financial Advisers Register.

Stage 2 registration (commences on proclamation but no later than 4 years after Assent) –
financial advisers are required to apply to the Registrar to register themselves annually. The intention is that this will coincide with the introduction of the new Australian Business Registry Service.

ASIC must administer an exam for financial advisers in accordance with the principles approved by the
Minister.

Provision of tax (financial) services
The Bill also provides that tax (financial) advisers will no longer be regulated by the Tax Practitioners Board but instead will be regulated only under the Corporations Act 2001 (Cth). The changes will mean that in order to provide tax (financial) advice services, a person will either need to be a registered tax agent, or be a financial adviser who has met the additional education and training standards to provide tax (financial) advice services under the Act.

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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.