The Association of Financial Advisers (AFA) does not believe that annual renewal is necessary, although we are very conscious of the Government’s determination to implement the Royal Commission recommendations and the lack of any other push back within the Parliament.
Annual renewal represents another significant addition to the costs of financial advice which will ultimately impact access to financial advice for everyday Australians. This is concerning for those people who will now struggle to afford financial advice.
The legislation is another Royal Commission related Bill that has been pushed through the Parliament with undue haste and lack of due process. We have repeatedly seen these Bills submitted and passed without a Regulation Impact Statement or any form of Parliamentary Inquiry and inadequate debate of the substance of the Bill.
The inevitable result of this is an increasing number of unintended consequences which will have negative implications for financial advice practices and flow on effects in terms of extra cost and complexity for clients. These issues will need to be fixed down the track.
We are pleased that the Government has made significant improvements to the final Hayne Royal Commission Response No. 2 Bill, relative to the January 2020 exposure draft, however we are disappointed that the Government has failed to take onboard our sensible feedback on the Bill, which would have served to improve the efficiency of the process and to make it more user friendly, without undermining the intent.
The Government will need to work out how to fix the important issue with timing differences with FDSs, that has led to ASIC recommending that advisers manually check product systems to confirm that FDSs are correct. The failure to address this as part of this reform, when the Government is simultaneously talking about red tape reduction, is disappointing.
The Bill is due to start from 1 July 2021, which is now only four months away. While there is a 12-month transition period, there is a lot of complexity in the transition arrangements and much to be done in this short time. Product providers will need to ensure that system solutions are available for the efficient capture of client consent forms.
We will be watching this very closely, and updating our members as this progresses.
Tel. 0407 071 121