The AFA has released a statement in which it says it does not believe that annual renewal is necessary and that it represents another significant addition to the costs of financial advice which will ultimately impact access to advice for Australians.
The release of this statement follows the successful passage through Parliament of the Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020, which Treasurer, Josh Frydenberg and the Minister for Superannuation, Financial Services and the Digital Economy Jane Hume agree “…will further protect Australian households from hidden fees and unexpected expenses”.
The AFA’s statement notes it is “…very conscious of the Government’s determination to implement the Royal Commission recommendations and the lack of any other push back within the Parliament”.
It says the legislation is another Royal Commission related Bill that has been pushed through the Parliament with undue haste and lack of due process. It adds it has repeatedly seen these Bills submitted and passed without a Regulation Impact Statement or any form of Parliamentary Inquiry and inadequate debate around the substance of the Bill.
…an increasing number of unintended consequences …will have negative implications for financial advice practices
The association says 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,” it warns.
The statement notes the AFA is pleased that the Government has made significant improvements to the final 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.” (See also: AFA Calls for Removal of FDS Requirement.)
The AFA adds that the Government will need to work out how to fix what it refers to as the important issue with timing differences with FDSs, which 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,” it says.
The legislation is due to be implemented from 1 July 2021.