Confused about where the financial services changes such as FOFA, LIF, etc are at now that parliament has been prorogued and an election called? Here, imac legal summarises the state of play for you.
FOFA
The FOFA changes that imac legal summarised here beat the prorogation of Parliament, have passed both Houses of Parliament and received Assent on 18 March 2016 so are now law. The changes were contained in the Corporations Amendment (Financial Advice Measures) Bill 2016.
In short, the main changes affecting advisers are:
- the best interests duty still includes the ‘catch-all’ requirement (i.e. adviser need to “take any other step that … would reasonably be regarded as being in the best interests of the client …”);
- if you have ‘ongoing fee arrangements’ you now have 60 days (instead of the previous 30 days) to get your FDS/Opt-in notice to clients from the relevant disclosure/renewal date;
- more training and education benefits are allowed and will not treated as ‘conflicted remuneration’. i.e. if the benefit is “relevant to the carrying on of a financial services business” it will not be conflicted remuneration;
- if you “cause or authorise” conflicted remuneration to be given this is caught under the restrictions on conflicted remuneration (but there is an exception for a super fund member authorising a super trustee to make a payment for relevant super advice);
- the Palmer United Party amendments never got enacted.
See imac legal’s article for more details on the changes.
Professional Standards
Despite the Government recently announcing some changes on 28 April 2016 to the proposed new professional standards legislation governing financial advisers, the legislation never passed the ‘Exposure Draft’ stage. The Bill was titled Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015.
If or when it is introduced, the Bill seeks to raise the education and professional standards of financial advisers. If interested, you can read Treasury’s summary of the Bill and the Government’s subsequent announcement of intended changes.
And while there is broad bi-partisan support for the thrust of the Bill it will have to be introduced to Parliament anew as it never made it there during the current Parliament.
Life Insurance Framework (LIF)
The Corporations Amendment (Life Insurance Remuneration Arrangements) Bill 2016 has lapsed and is not proceeding under the current Parliament.
As such, the Exposure Draft Regulations will also not be going ahead without the principal act in place. The changes were proposed to introduce caps on commissions, bring in commission clawbacks, and various assorted changes.
This means that the proposed changes, which were described here and here will not go ahead at this point in time.
The Bill will have to be re-introduced to the new Parliament in order for it to become law. The Regulations will also have to be re-introduced. Of course, the Bill may change before being re-introduced, if at all.
Crowd-sourced funding
The Corporations Amendment (Crowd-Sourced Funding) Bill 2015 has lapsed and is not proceeding under the current parliament. Despite the Senate agreeing to resume consideration of the Bill after prorogation the Bill lapsed at dissolution of the Parliament. This was the legislation that was to usher in the government’s new crowd-funding rules.
The Bill will have to be re-introduced to the new Parliament in order for it to be become law. Of course, the Bill may change before being re-introduced, if at all.
Thanks Ian, great summary and appreciate the clear and concise information.