Financial advisers will be able to comment on how the new government-run disciplinary body will function and the sanctions it can make after the government released a policy paper and opened consultation on its operation.
The policy paper, released by Superannuation, Financial Services and the Digital Economy Minister Jane Hume, follows the introduction of the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 into parliament on 24 June.
The bill is the result of recommendation 2.10 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, which proposed the establishment of a new disciplinary system for financial advisers.
The government committed to the creation of the body in October 2019 and in December 2020 outlined plans for the Financial Services and Credit Panel (FSCP) within the Australian Securities and Investments Commission (ASIC) to take on that role.
The paper is seeking industry feedback on the regulations that will accompany the bill and determine the circumstances when ASIC must convene an FSCP to consider alleged financial adviser misconduct, and the types of administrative sanctions that can be made against a financial adviser that must be included on the Financial Advisers Register.
Feedback on the paper will contribute to the development of exposure draft regulations, which will be released later this year for further consultation, with submissions closing on 20 August.
Hume also announced, in conjunction with Treasurer Josh Frydenberg, the finalisation of regulations to support the Your Future, Your Super reforms, which passed through parliament in mid-June.
The regulations will prescribe the definition of a ‘stapled fund’, including tie-breaker rules for determining which fund is to be an employee’s stapled fund where they have multiple existing funds, and specify how products will be ranked on the online YourSuper comparison tool.
They will also ensure the final methodology applied for the annual performance test is strengthened to prompt underperforming products to reduce fees as soon as possible, and further strengthen the prohibition on funds offering inducements to employers.
