The Federal Government has announced a six month deferral to the implementation of commitments associated with the Banking Royal Commission, as a result of the impacts of Covid-19.
A statement from Treasurer, the Hon Josh Frydenberg, says the deferral will enable the financial services industry to “…focus their efforts on planning for the recovery and supporting their customers and their staff during this unprecedented time”.
He says that under the updated timetable, the measures that the Government had indicated would be introduced into the Parliament by 30 June 2020, will now be introduced by December 2020. Similarly, those measures originally scheduled for introduction by December 2020 will now be introduced by 30 June 2021.
“In relation to commencement dates contained in Royal Commission related exposure draft legislation issued prior to the coronavirus pandemic, the Government will also extend these dates by an additional six months.”
The statement notes that the announcement “… balances the need to implement the recommendations of the Royal Commission with the need to ensure our financial institutions are in a position to devote their resources to responding to the significant challenges posed by the coronavirus”.
“The changes will also provide certainty and clarity to all stakeholders about the Government’s commitment to implementing the recommendations arising out of the Royal Commission.”
Meanwhile a statement from the AFA on the deferral of the next two phases of the recommendations lays out the key items that are relevant to financial advice. Those recommendations originally set for 30 June 2020 and now moving to 31 December 2020 are:
- 2.1 Annual Renewal and Payment
- 2.2 Disclosure of Lack of Independence
- 2.7 Reference Checking
- 2.8 Licensees reporting compliance concerns
- 2.9 Licensee misconduct obligations
- 3.2 No advice fees from MySuper accounts
- 3.3 Limitations on deducting advice fees from choice accounts.
The AFA says under the recommendations now moved to 30 June 2021 are:
- 2.10 New Disciplinary System
- 7.1 Compensation Scheme of Last Resort.
The AFA statement says it welcomes the announcement of the deferral “… however we believe that it is appropriate for the Government to continue to carefully consider the impact of the coronavirus on the Australian financial services industry before deciding to proceed with the implementation of these recommendations. We feel it is recognised that financial advisers should be able to focus their attention on assisting clients impacted by the coronavirus crisis”.
…We remain hopeful that this deferral will enable the Government to carefully consider the proposals that we have put forward to improve the draft legislation…
“We remain hopeful that this deferral will enable the Government to carefully consider the proposals that we have put forward to improve the draft legislation and make these additional requirements both achievable and practical,” the AFA statement says.
“It remains critical that any additional obligations are implemented in an efficient and streamlined fashion, and don’t simply add red tape without delivering any tangible value to financial advice clients.”
In turn, while a statement from FPA CEO Dante De Gori welcomes the Government’s clarity on the timings, the FPA believes that given the current uncertain environment, the Government should remain open to reviewing the timeline as Australia progresses through the next stage of the global health and economic crisis.
De Gori says FPA members have been inundated in recent months, “… supporting not only existing clients but also providing the broader community with advice as many Australians find themselves in a financial situation they have never experienced before. Our members’ priority is to assist them in managing their financial position, which is second only to their health in personal importance”.
He continues: “We look forward to recommencing discussions with the Government about how some of the reforms could be better amended to reduce over-regulation and red tape. There is a direct relationship between the rising cost of regulation, time constraints on financial planners and the ability of Australians to access advice.”
De Gori says that while the FPA broadly agrees with the draft legislation on the Royal Commission recommendations, “… we do have real concerns for both the profession and consumers who we are seeking to serve”.