The Australian Securities and Investments Commission has advised it will adopt a ‘non-enforcement’ position for those elements of the Future of Financial Advice (FoFA) legislation that the Government intends to amend.
Responding to an announcement by Senator Arthur Sinodinos prior to Christmas in which he flagged a number of reforms to the FoFA regime (see: Sinodinos Announces FoFA Amendments), ASIC said it would not take enforcement action against financial service practitioners in relation to the specific FoFA provisions that the Government plans to repeal.
‘For example,’ the regulator said in a statement on 20 December 2013, ‘We will not take action for breaches of current section 962S of the Corporations Act 2001, which requires fee disclosure statements to be provided to retail clients with ongoing fee arrangements entered into before 1 July 2013.’ (The Government has proposed that the fee disclosure requirements be amended so they only apply to new customers from 1 July 2013.)
…we are working closely with financial advisers and product providers to ensure understanding and compliance with the FoFA requirements
ASIC also reiterated that it had adopted a facilitative approach to the reforms since their introduction in July 2013.
‘While we will take enforcement action where we see deliberate breaches of the new requirements or failure to make reasonable efforts to comply, our focus during the facilitative period will continue to be on education and assistance. Accordingly, we are working closely with financial advisers and product providers to ensure understanding and compliance with the FoFA requirements.’
ASIC’s facilitative approach is expected to continue until mid-2014. In addition, the regulator said it would review its regulatory guides in light of the changes proposed by Senator Sinodinos, and consult with the financial services community once the amendments had been made.
For more on the amendments announced by Senator Sinodinos, click here.
To read about the industry’s reaction to the proposed changes, click here.
