The Government has released its Financial Services Royal Commission Implementation Roadmap setting out when it will implement its response to the Royal Commission Final Report published in February 2019. Background.
The following lists outline indicative timelines for implementation of recommendations and additional commitments requiring Government action.
Legislation to be consulted on and introduced by end-2019
• Recommendation 1.2 – Mortgage broker best interests duty
• Recommendation 1.3 – Mortgage broker remuneration (consistent with the Government’s response)
• Recommendation 2.4 – Ending grandfathered commissions for financial advisers (legislation introduced on 1 August 2019)
• Recommendation 4.2 – Removing the exemptions for funeral expenses policies
• Recommendation 4.7 – Application of unfair contract terms provisions to insurance contracts
• Recommendation 4.8 – Removal of claims handling exemption for insurance
• Additional Commitment – ASIC’s search warrants powers (ASIC Enforcement Review)
• Additional Commitment – ASIC’s telecommunications interceptions powers (ASIC Enforcement Review)
• Additional Commitment – ASIC’s licensing powers (ASIC Enforcement Review)
• Additional Commitment – ASIC’s power to ban people in the financial sector (ASIC Enforcement Review)
Legislation to be consulted on and introduced by 30 June 2020
• Recommendation 1.7 – Removal of point-of-sale exemption
• Recommendation 1.15 – Enforceable code provisions for industry codes of conduct
• Recommendation 2.1 – Annual renewal and payment for financial advice
• Recommendation 2.2 – Disclosure of lack of independence of financial advisers
• Recommendation 3.1 – No other role or office for trustees of Registrable Superannuation Entities (RSE)
• Recommendation 3.2 – No deducting advice fees from MySuper accounts
• Recommendation 3.3 – Limitations on deducting advice fees from choice superannuation accounts
• Recommendation 3.4 – No hawking of superannuation products
• Recommendation 4.1 – No hawking of insurance products
• Recommendation 4.3 – Deferred sales model for add-on insurance
• Recommendation 4.4 – Cap on commissions paid to vehicle dealers for sale of add-on insurance products
• Recommendation 4.5 – Duty to take reasonable care not to make a misrepresentation to an insurer
• Recommendation 4.6 – Limiting circumstances where insurers can avoid life insurance contracts
• Recommendation 4.8 – Removal of claims handling exemption
• Additional commitment in response to Recommendation 4.2 – Restricting use of the term ‘insurer’ and ‘insurance’
• Recommendation 1.6 – Reference checking and information sharing for mortgage brokers
• Recommendation 2.7 – Reference checking and information sharing for financial advisers
• Recommendation 2.8 – Licensee obligations to report compliance concerns
• Recommendation 2.9 – Licensee obligations where misconduct by financial advisers
• Recommendation 3.8 – Adjustment of APRA’s and ASIC’s roles in superannuation
• Recommendation 6.3 – General principles for ASIC and APRA to co-regulate superannuation
• Recommendation 6.4 – ASIC as conduct regulator for superannuation
• Recommendation 6.5 – APRA to retain current functions for superannuation
• Recommendation 6.9 – Statutory obligation for APRA and ASIC to co-operate and share information
• Recommendation 6.14 – A new oversight authority for APRA and ASIC
• Recommendation 6.11 – Improving ASIC’s Board meeting procedures
• Recommendation 7.2 – Implementing the ASIC Enforcement Review Taskforce’s recommendations to improve the breach reporting regime
• Additional commitment in response to Recommendation 7.2 – Implementing the ASIC Enforcement Review Taskforce’s directions power recommendations
Legislation to be consulted on and introduced by end-2020
• Recommendation 2.10 – A new disciplinary system for financial advisers
• Recommendation 7.1 – Compensation scheme of last resort
• Recommendation 3.9 – Extending the Banking Executive Accountability Regime (BEAR) to RSE licensees
• Recommendation 4.12 – Extending the BEAR to APRA-regulated insurers
• Recommendation 6.6 – Joint administration of the BEAR
• Recommendation 6.7 – Statutory amendments to facilitate co-regulation
• Recommendation 6.8 – Extending the BEAR to all APRA-regulated financial services institutions.
• Additional commitment – extension of the executive accountability regime to non-prudentially regulated financial entities to be administered by ASIC.
Reviews in 2022
• Recommendation 1.4 – Council of Financial Regulators and the Australian Competition and Consumer Commission review of changes to mortgage broker remuneration and operation of upfront and trail commissions
• Recommendation 2.3 – Review of measures to improve the quality of financial advice – Consistent with the Royal Commission recommendations, the review will examine all exemptions from the ban on conflicted remuneration, including for general insurance, consumer credit insurance, timeshare and stockbroking remuneration, and stamping fees
• Recommendation 2.6 – Review of each remaining exemption from the ban on conflicted remuneration. This review will occur as part of the review of measures to improve the quality of financial advice (recommendation 2.3)
• Additional commitment – Independent inquiry into changes in industry practices
• Additional commitment – Assessment of the effectiveness of changes made by the regulators following the Royal Commission by the (to be established) financial regulator oversight authority
Other measures
• Recommendation 1.11 – A national farm debt mediation scheme – The Government is working with states and territories through the Agriculture Ministers’ Forum (AGMIN) to progress work on the establishment of a national farm debt mediation scheme
• Recommendation 1.5 – Regulating mortgage brokers as financial advisers – This recommendation will be progressed following the review of financial advice reforms (recommendation 2.3), given that review may recommend changes to the regulation of financial advisers
• Recommendation 3.5 – One default superannuation account – Implementation of this recommendation will be considered in the context of the findings and recommendations of the Productivity Commission’s report Superannuation: Assessing Efficiency and Competitiveness
• Additional commitment in response to Recommendation 7.1 – Increasing AFCA’s role in remediation programs – legislation to be introduced by mid-2021
• Additional commitment – Extension of Federal Court jurisdiction in relation to criminal corporate crime – legislation to be introduced by mid-2020
