October kicks off regulatory reform for advisers

Advisers will come under further regulatory changes this month as various measures come into force and are being advised to ensure they are prepared.

There were several measures coming into force at beginning of October related to Hayne Royal Commission recommendations and the design and distribution obligations (DDO).

These would cover areas such as strengthening the unsolicited selling of superannuation and insurance products, strengthening breach reporting requirements and requiring Australian financial services licensees to provide reference checks.

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The DDO requirements, which would come into force on 5 October, would help consumers obtain appropriate financial products by requiring issuers of financial products to determine an appropriate target market for these products.

The Australian Securities and Investment Commission (ASIC) said it would take a “reasonable approach” to the early stages of reforms.

In a bid to help financial advisers meet their DDO requirements, the Financial Services Council (FSC) had put together target market determination templates and data standards which it said would “make life much easier” for product issuers, platform and financial advisers.

Sally Loane, FSC chief executive, said: “We are confident that the FSC, working closely with our members, has done as much as we can to help businesses transition to the new regime. We are also pleased ASIC has said it will take a ‘reasonable approach’ to the start of the regulations, which should assist businesses as they adapt.

“The red tape burden from this raft of reforms is significant and can add to the cost of delivering products and services. We look forward to continuing to work with Government and ASIC on ways to improve consumer benefits and reduce red tape.”

Starting from 1 October, the Royal Commission recommendations coming into force were:

  • Individual Disability Income Insurance reforms;
  • Reference checking and information sharing; and
  • New breach reporting requirements.

Followed by these reforms from 5 October:

  • Duty to take reasonable care not to make a misrepresentation;
  • Anti-hawking reforms;
  • Deferred sales for add-on insurance; and
  • Internal dispute resolution.

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