A new disciplinary system for financial advisers with a central disciplinary body headlines the government's Royal Commission implementation roadmap released today.
Revealing how the government will tackle the 76 recommendations made by Commissioner Kenneth Hayne in his landmark report into misconduct in Australia's financial services system, Treasurer Josh Frydenberg said the government was determined to restore trust in the financial system.
To that end, the government plans to hold sections of the industry accountable for failing to act in line with the cultural, governance and remuneration changes sweeping the industry. For financial advisers, that means dealing with a new disciplinary system which will include a single, central disciplinary body.
The government's roadmap shows legislation to enforce the new disciplinary body would be introduced before the end of 2020, however no further details were revealed.
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Frydenberg said the need for change was undeniable, and noted the community's expectation that the government's response to the Royal Commission is implemented swiftly.
He added more than 20 government commitments would be implemented or have legislation introduced to the parliament by the end of this year, including ending grandfathered commissions for financial advisers and acting on ASIC's enforcement review by expanding the corporate regulator's power to ban people in the financial services sector.
Hayne's ongoing fee arrangement recommendations - including that clients annually renew ongoing fee arrangements and advisers record the services clients are entitled to and the fees they will pay in writing - are set to be consulted on and introduced by 30 June 2020, alongside action on the recommendation to halt advice fees from being deducted from MySuper accounts.
The government also committed to reviewing measures implemented by government, regulators and financial services entities to improve the quality of financial advice in 2022 in line with Hayne's recommendation.
Legislation enacting Hayne's recommendations for ASIC and APRA to co-regulate superannuation and adjust their existing roles in regulating the sector is also set to be consulted on and introduced by midway through next year, which Frydenberg called a "key measure". The Treasurer added the scale and complexity of the government's response was unprecedented, drawing a comparison with the Corporate Law Economic Reform Program introduced in the 1990s.
"It [government's response] demonstrates the government's commitment to strengthening consumer protection laws and empowering Australia's financial regulators to enforce the law," Frydenberg said.
"In comparison, the Future of Financial Advice Reforms (FOFA), took almost 23 months from when the Parliamentary Joint Committee on Corporations and Financial Services tabled its report to when legislation was first introduced.
"There are currently 24 streams of work under way in Treasury that are progressing the Government's commitments to the Royal Commission."
Frydenberg said the government anticipated giving effect to the implementation plan would take up 75% of Treasury's legislative agenda over the next year. For context, the Treasury legislative program typically represents a quarter of the total government legislative program, according to the Treasurer.