On 20 March 2013, key pieces of legislation amending financial services law were introduced into Parliament.
The Corporations Amendment (Simple Corporate Bonds and Other Measures) Bill 2013 amends the Corporation Act 2001, to define the terms ‘financial planner’ and ‘financial adviser’ and to restrict the use of those terms, and terms of similar importance.
The legislation complements the Future of Financial Advice reform agenda by purporting to improve trust and confidence in the financial planning sector. It requires that only providers of personal financial product advice on designated financial products and authorised under an Australian financial services license (AFSL), can hold themselves out to be a financial adviser or financial planner.
A designated financial product means a financial product other than:
In other words, AFSL holders who provide personal financial product advice in respect of, for example, superannuation, life insurance and managed funds will be caught by the new regime and entitled to refer to themselves as a “financial adviser” or “financial planner”.
Currently, it is an offence under the Corporations Act 2001 for unlicensed providers to use certain restricted words or expression. This reforms proposed under the Bill will expand on the current restrictions so that the restrictions apply to genuine providers of personal financial product advice.
It is proposed that the legislation takes effect from 1 July 2013 or the day after the Act receives Royal Assent. However, it has been indicated that the Bill will be referred to the Parliamentary Joint Committee on Corporations and Financial Services.
Assuming the reforms are introduced, those who are impacted should ensue that their advertising material, business listings or communications with consumers does not make reference to the terms ‘financial planner’, ‘financial adviser’, ‘financial planning adviser’ or ‘financial advising agent’ or anything of the like, if the legislative criteria for doing so is not satisfied.
Schedule 5 of the Tax and Superannuation Laws Amendment (2013 Measures No 2) Bill 2013 amends the SIS Act to expand the duties of trustees of superannuation funds (other than the duties of trustees of a pooled superannuation trust or a self managed superannuation fund).
Impacted trustees will be required to establish and implement procedures to consolidate accounts where a member of the fund has multiple accounts within the fund. Specifically, each trustee must:
This is a welcome change, in line with the Stronger Super reform agenda, for those members not actively managing their superannuation. However, the proposed legislation clearly increases responsibility for trustees to manage multiple accounts within their funds.
The Bill proposes to introduce a new standard condition in the Registrable Superannuation Entity’s RSE Licence to ensure that the trustee complies with the new requirements. A trustee that does not establish the required rules will commit a strict liability offence.
It is proposed that the reforms take effect from 1 July 2013 and the first round of consolidation will occur by 30 June 2014.
We are available to assist you with further information should your business be impacted by these proposals. If so, please contact a team member listed in this publication.
The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.