Better Advice Bill reforms commence

Key reforms under the Better Advice Bill have commenced, including the Financial Services and Credit Panel (FSCP) and new requirements for tax financial advisers.

The FSCP now had statutory functions and powers to direct financial advisers to undertake specific training, counselling or supervision and to report certain matters to the Australian Securities and Investments Commission (ASIC).

The FSCP could also suspend or cancel a financial adviser’s registration; issue infringement notices in specified circumstances; recommend that ASIC commence civil penalty proceedings; and enter into enforceable undertakings with financial advisers.

From 1 January, 2022, ASIC must convene an FSCP in circumstances prescribed by the Financial Sector Reform Amendment (Hayne Royal Commission Response—Better Advice) Regulations 2021.

ASIC said it needed to convene an FSCP “where it reasonably believes that a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes an insolvent under administration and ASIC is aware of this. In addition, ASIC must issue a warning/reprimand in relation to certain misconduct”.

ASIC would then proceed to issue a warning/reprimand or make a referral to an FSCP only where it had formed the reasonable belief after carrying out its usual triaging, investigatory work and referral processes.

It noted not all concerns about the conduct of financial advisers that came to ASIC’s attention would result in ASIC issuing a warning/reprimand or a referral to an FSCP. 

The corporate regulator also planned to consult on guidance regarding the operation of the FSCP early this year.

From 1 January, 2022, tax financial advisers who provided, or intended to provide tax financial advice to retail clients for a fee would:

• Need to be a 'qualified tax relevant provider' under the Better Advice Act;
• Need to be listed on the Financial Adviser Register as a relevant provider and registered with ASIC from 1 January, 2023. They would no longer have to be registered with the Tax Practitioners Board as an individual tax (financial) adviser. The Tax Practitioners Board will not accept applications to be registered as an individual tax (financial) adviser after 31 December, 2021; and
• Primarily be regulated by ASIC under the Corporations Act.