The Corporations Amendment (Streamlining of Future of Financial Advice) Bill 2014 has been passed by the House of Representatives but it has been referred to the Senate Economics Reference Committee for an inquiry.

It is likely that the Senate Committee will review the Bill having regard to recent adverse publicity relating to financial planners.

UPDATE 23 September 2014: Senate Committee report

Background

The Corporations Amendment (Statements of Advice) Regulation 2014 was registered on 8 September 2014 in order to meet the Government’s undertakings to the cross-bench senators.

UPDATE 26 September 2014: the Chair of the Senate Standing Committee on Regulations and Ordinances will move on 3 December 2014 that the regulation be disallowed

UPDATE 19 November 2013: Regulation disallowed

This regulation changes disclosure requirements in the Statement of Advice, requiring an adviser to disclose statutory obligations.

The amendments also provide requirements for the adviser and the client to sign the Statement of Advice, as well as any instructions from clients for further or varied advice.

Advisers must include the following statements and information in the Statement of Advice to ensure clients are aware of their existing rights and their adviser’s obligations under the Act:

• that the adviser is required to act in the best interests of their client and prioritise their client’s interests ahead of their own, consistent with the requirements in sections 961B and 961J of the Act;
• that any fees must be disclosed and that the adviser will provide a fee disclosure statement annually if the client enters into an ongoing fee arrangement to which Division 3 of Part 7.7A of the Act applies (which will generally be those entered into on or after 1 July 2013);
• that a client may have the right to return financial products under a 14-day cooling-off period in accordance with the arrangements under Division 5 of Part 7.9 of the Act;
• that the adviser genuinely believes that the advice he or she is providing to the client is in the client’s best interests given the client’s relevant circumstances; and
• that the client has the right to seek further or varied advice from their adviser at any time, for example, if they experience a change in their circumstances.