On Friday the Treasurer released for consultation a raft of proposals to implement 24 of the Government’s responses to recommendations of the Financial Services Royal Commission final report. The consultation period for all the proposals ends on 28 February 2020.
This alert focuses on some of the key proposals and some initial takeaways. Further in-depth analysis of particular proposals will be released in the coming weeks.
Initial takeaways if the proposals are passed in their current form
- Most amendments are proposed to take effect on Royal Assent or 1 July 2020 giving little time to implement changes once the legislation is passed. There are limited transitional provisions.
- Retail financial product distribution must comply with the more extensive hawking prohibitions by 30 June 2020.
- Breach reporting procedures must change significantly and where personal advice has been given there will be onerous obligations to notify and remediate clients (subject to a 1 April 2021 transition). ASIC will have an expanded role in superannuation regulation from 30 June 2020.
- If ASIC has reason to suspect a contravention of financial services law, ASIC will be able to make directions in relation to the contravention. Example directions include not to accept new clients, to conduct reviews or audits and to engage people to carry out specific tasks. This power is far-reaching and provides ASIC with another alternative to enforcement.
- By 30 June 2020, superannuation trustees must not act in another’s interest (e.g. an agency relationship) other than in acting as a super trustee or providing personal advice. Accordingly, some superannuation trustees must transfer businesses other than personal advice business by 30 June 2020 and may need to revisit obligations to counterparties (e.g. relation to investments and outsourcing).
- Some trustees of corporate superannuation funds that are not authorised under an Australian financial services licence to deal in superannuation must apply to vary their licences by 30 June 2020.
Non-superannuation or insurance specific proposals
Additional superannuation or insurance proposals