Bills Digest no. 58, 2016–17
PDF version [863KB]
Paula Pyburne
Law and Bills Digest Section
8
February 2017
Contents
Purpose of the Bill
Structure of the Bill
Background
Issue of competency
Murray report
Inquiry into proposals
Issue of culture
Consultation
Final form of the Bill
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Creating the standards body
PJC inquiry no. 2 recommendation
Composition
Key issue—independence
Constitution
Professional standards
Application of professional standards
Education and training
Stakeholder comments
Application provisions
Ethical standards
Consultation
Comments by the Scrutiny of Bills
Committee
Review of decisions
Delegation of legislative power
Compliance schemes
Requirement for membership in a
compliance scheme
Approval of compliance schemes
Modification and review of a
compliance scheme
Being covered by a compliance scheme
Investigation by the monitoring body
Register of relevant providers
PJC inquiry no. 2
Terms of the Bill
Ongoing obligation to notify ASIC
Restriction on the use of the term
financial adviser
Current law
PJC inquiry no. 2
Terms of the Bill
Comments by the Scrutiny of Bills
Committee
Stakeholder comments
Other provisions
Amendments to the Tax Agent
Services Act
Concluding comments
Date introduced: 23
November 2016
House: House of
Representatives
Portfolio: Treasury
Commencement: The
earlier of a single day fixed by Proclamation or six months after Royal
Assent
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent,
they become Acts, which can be found at the Federal Register of Legislation
website.
All hyperlinks in this Bills Digest are correct as
at February 2017.
Purpose of
the Bill
The purpose of the Corporations Amendment (Professional
Standards of Financial Advisers) Bill 2016 (the Bill) is to amend the Corporations Act
2001 to raise the education, training and ethical standards of
financial advisers by requiring relevant providers of personal advice to retail
clients on complex financial products to hold a degree qualification, undertake
a professional year, pass an exam, undertake continuous professional
development and comply with a code of ethics.
Structure
of the Bill
The Bill has two Parts:
Background
Issues relating to the professional, ethical and
educational standards of financial advisers have been the subject of a number
of formal inquiries dating back as far as 1979.[1]
In order to address some of these issues, in 2011 the
Labor Government introduced the Future of Financial Advice reforms (FOFA) into
Parliament. This was a package of amendments to the Corporations Act to
change how financial advice is delivered to clients. The FOFA reforms were
concerned with the way that financial advisers behave when giving advice,
including how clients are charged and how fees are disclosed.[2]
The FOFA reforms were the Labor Government’s response to
the 2009 report of the Parliamentary inquiry into financial products and
services (PJC inquiry no. 1).[3]
The impetus for the PJC inquiry no. 1 was a number of significant corporate
collapses, including Storm Financial and Opes Prime, which led to considerable
losses for many retail investors.[4]
The PJC inquiry no. 1 was particularly focussed on the role of financial
advisers; the regulatory settings for the selling of financial products and
services; the significance of adviser remuneration models—especially payments
by commission, their potential for conflicts of interest and the need they
create for appropriate disclosure; and generally, the appropriateness of advice
and information provided to consumers about financial products and services.[5]
The FOFA reforms were implemented by two key pieces of
legislation:[6]
- the Corporations
Amendment (Future of Financial Advice) Act 2012 (FOFA 1) which:
- required
providers of financial advice to obtain client agreement to ongoing advice fees
- enhanced
the requirement for disclosure of fees and services associated with ongoing
fees and
- improved
the ability of the Australian Securities and Investments Commission (ASIC) to
supervise the financial services industry, through amendments to its licensing
and banning powers for financial advisers.
- the Corporations
Amendment (Further Future of Financial Advice Measures) Act 2012 (FOFA
2) which:
- required
those providing personal financial advice to retail clients to act in the best
interests of their clients, and to give priority to their client’s interests
- imposed
a prospective ban on conflicted remuneration structures and
- applied
existing regulatory mechanisms under the Corporations Act more directly
to individual advisers as well as to licensees.
The implementation date for most of the FOFA reforms was
originally 1 July 2012. However, Government amendments during the passage
of the legislation provided for the provisions to be voluntary until
1 July 2013, after which time compliance with the relevant requirements
would be mandatory.[7]
Issue of competency
Murray report
The global financial crisis (GFC) brought to light
significant numbers of Australian consumers holding financial products that did
not suit their needs and circumstances. The most significant problems related
to shortcomings in disclosure and financial advice, and over-reliance on the financial
literacy of the persons receiving financial advice. The changes introduced
under the FOFA reforms addressed some of these shortcomings. However, the
Financial System Inquiry (FSI) report (known as the Murray Report because of
its Chairperson, David Murray), published on 7 December 2014, considered that
one of the next issues to be addressed was that of adviser competency.[8]
The Murray Report described the issue of adviser competency as follows:
A number of high-profile cases where consumers have suffered
significant detriment through receiving poor advice, and a series of ASIC
studies, have revealed issues with the quality of advice. For example, ASIC’s
report on retirement advice found that only 3 per cent of Statements of Advice
were labelled ‘good’, 39 per cent were ‘poor’ and the remaining 58 per cent
‘adequate’. Although these cases and many
of these studies occurred before the FOFA reforms to improve remuneration
structures, this is not the only issue. Adviser competence has also been a
factor in poor consumer outcomes. ASIC’s review of advice on retail structured
products found insufficient evidence of a reasonable basis for the advice in
approximately half of the files.[9]
To that end, the Murray Report recommended that standards
of financial advice should be improved by lifting adviser competency.[10]
Inquiry into proposals
At much the same time, the Parliamentary Joint Committee on
Corporations and Financial Services (PJC inquiry no. 2) issued the report of
its inquiry into proposals to lift the professional, ethical and education
standards in the financial services industry.[11]
The PJC inquiry no. 2 made a series of recommendations
including, but not limited to:
- updating
the contents of the register of financial advisers[12]
- increasing
the mandatory minimum educational standard for financial advisers to a degree
qualification[13]
- listing
a financial adviser on the register only if they have satisfactorily completed
a structured professional year and passed the assessed components; and passed a
registration exam set by the Financial Professionals’ Education Council[14]
- requiring
mandatory ongoing professional development for financial advisers[15]
and
- establishing
a code of ethics.[16]
Diagram 1: key components of the
PJC model
Source: Treasury, Lifting
the professional, ethical and education standards in the financial services
industry, Consultation paper, March 2015, p. 6.
Issue of culture
The Senate Economics References Committee (Economics
Committee) 2016 inquiry into agribusiness managed investment schemes—which
looked at the collapse of forestry-based managed investment schemes (MIS) such
as Timbercorp and Willmott Forests—considered that the issue was not only one
of competency but also one of culture.[17]
Describing the issue, the Economics Committee said:
Much of the conduct detailed throughout this report, however,
goes beyond competence. In many cases, the financial adviser was acting
unethically—ignoring the client's risk profile, failing to disclose commissions
or underplaying risks attached to the investment strategy. In some of the more
egregious examples, submitters allege that their adviser falsified documents,
withheld documents, and deliberately misled them.[18]
The Economics Committee noted that the government had made
a commitment to require financial advisers to adhere to a code of ethics and
added:
In light of the evidence demonstrating that integrity issues
were at the heart of some of the poor financial advice given to MIS investors,
the committee highlights the importance of establishing such a robust code of
ethics and that this measure warrants close and determined attention.[19]
Consultation
In March 2015, Treasury issued a consultation paper
seeking public comment on the key components of the model proposed by the PJC
inquiry no. 2 set out in Diagram 1, above.[20]
Treasury received 56 submissions
in relation to its consultation.[21]
Comments of submitters are canvased under the heading ‘Key issues and
provisions’ in this Bills Digest.
Final form of the Bill
The Bill in its final form does not reflect all of the key
components of the model recommended by the PJC inquiry no. 2. For instance, the
PJC recommended the establishment of the Finance Professionals Education
Council (FPEC) to set curriculum requirements, develop a structured
professional year, develop and administer a registration examination and
establish professional pathways.
The Bill does not establish the FPEC. Instead, it
establishes a standards body (yet to be named), as a Commonwealth company
limited by guarantee. Nevertheless, the standards body has the functions that
the PJC envisaged would be carried out by the FPEC.
Other requirements are also absent from the Bill, including
compulsory membership of a professional association and the requirement that
professional associations representing individual financial advisers establish
a code of ethics to be approved by the Professional Standards Council's. This
Bills Digest will highlight differences between the PJC inquiry no. 2 model and
the model proposed in the Bill where they occur.
Committee
consideration
Selection of Bills Committee
At its meeting of 1 December 2016, the Selection of Bills
Committee determined that the Bill will not be referred to a Senate Committee
for inquiry and report.[22]
Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills
commented on the Bill in its Alert Digest of
30 November 2016.[23]
Those comments are canvassed under the heading ‘Key issues in provisions’ in
this Bills Digest.
Policy
position of non-government parties/independents
At the time of writing this Bills Digest, there had been
little public comment about the Bill, although Independent Member, Cathy
McGowan, expressed a desire that the Bill be passed in the House of
Representatives in November 2016.[24]
It is likely though, given the long gestation of the Bill
and the recommendations of the inquiries which were the precursors of the Bill,
that it will receive in-principle support from many Members and Senators across
the political divide.
Position of
major interest groups
The submissions to Treasury in relation to its
consultation paper are primarily in favour of raising educational, professional
and ethical standards in order to ‘rebuild confidence and trust in the advice
sector and improve the quality of advice to acceptable levels’.[25]
According to CPA Australia and Chartered Accountants
Australia-New Zealand:
A robust and tailored education framework complemented by a
structured professional experience year is integral to ensuring the eligibility
requirements to provide financial planning advice are commensurate with the
level of responsibility that a financial planner has when providing such
advice.[26]
However, there is some disagreement between submitters as
to what level of education is required. In any event, submitters strongly
argued that the requirement for a certain level of education for those persons
who are working in the financial planning and financial advice industries at
present, should be subject to grandfathering.[27]
The Bill contains relevant grandfathering provisions.
Financial
implications
According to the Explanatory Memorandum to the Bill, its
financial impact on the Australian Government will be nil.[28]
However, the compliance cost for the financial service
industry has been calculated as $165.1 million.[29]
Statement of Compatibility with Human Rights
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed
the Bill’s compatibility with the human rights and freedoms recognised or
declared in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[30]
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights
considers that the Bill does not raise human rights concerns.[31]
Key issues
and provisions
Chapter 7 of the Corporations Act
sets out the rules about financial services and markets.
Within Chapter 7, Part 7.6 contains provisions relating to the licensing
of providers of financial services—in particular, the requirement for an
Australian financial services licence (AFS Licence).[32]
Item 12 in Part 1 of the Bill
inserts proposed Divisions 8A, 8B and 8C into Part 7.6 of the Corporations
Act.
Creating the standards body
PJC inquiry no. 2 recommendation
The PJC recommended that the professional associations
establish an independent Finance Professionals Education Council (FPEC) to,
amongst other things, set curriculum requirements and to develop a standardised
framework and standard for the graduate professional year to be administered by
professional associations.[33]
The PJC also recommended that professional associations be required to
establish codes of ethics.[34]
Bell Potter Securities strongly agreed that this role
should be undertaken by the relevant professional associations, stating:
The lifting and maintenance, monitoring and enforcement and
ongoing professionalism of the financial services industry is best accomplished
through and by professional associations, which it is compulsory for financial
advisers in the sector to join. The implementation and management of that
process would be funded by the membership fees paid to the professional
association so it would essentially be a user pays process.[35]
The final form of the Bill does not reflect this aspect of
the PJC’s recommended model.
Composition
Proposed
Division 8C of Part 7.6 of the Corporations
Act provides for a standards body. The Bill empowers the Minister to
declare, by notifiable instrument, that a body corporate is the standards body.[36]
The Minister must table the declaration in each House of the Parliament as soon
as practicable.
The Bill sets out the requirements to be met by the body
corporate, including that it is a company limited by guarantee and its
constitution provides that it must not be operated for profit.[37]
There are to be nine directors, appointed by the Minister, of whom (excluding
the chair of the board of directors):
- at
least three must have experience in carrying on a financial services business
or providing a financial service[38]
- at
least three must have experience in representing consumers of financial
services[39]
- at
least one must have experience in the field of ethics[40]
and
- at
least one must have experience in designing, or the requirements of,
educational courses or qualifications.[41]
Key issue—independence
The composition of the standards body, with its mix of
subject matter expertise for the directors, is consistent with the model
proposed by CHOICE which advocated that any new body:
... is governed by a board that is comprised of half members
with relevant consumer skills and experience, half members with relevant
industry skills and experience, and an independent Chair. Members should be
appointed based on their experience as opposed to representing any particular
organisation.[42]
Constitution
The constitution of the body must also state that a
director must not hold a managerial or executive office in a professional
association or association representing consumers of financial services, or represent
such an association if he, or she, is a member of it.[43]
Where a standards body makes a significant modification to its constitution, it
must notify the Minister in writing of the modification, including the text of
the modification, the date on which it takes effect and an explanation of the
purpose of the modification. If the standards body does not lodge a notice with
the Minister within 21 days after the modification takes effect, the
modification will cease to have effect.[44]
The Minister may disallow all or part of a notified significant modification.
The modification ceases to have effect when the standards body receives the
Minister’s notice of disallowance (which must be provided as soon as
practicable after the decision to disallow is made).[45]
The Minister may, at any time, by notifiable instrument,
revoke a declaration that a body is a standards body. The Minister must table
the revocation in each House of the Parliament as soon as practicable.[46]
Professional
standards
Application of professional
standards
Under proposed Division 8A,
which is inserted into Part 7.6 of the Corporations Act by item 12 of the Bill, the professional standards take
two forms—educational and ethical. They apply
to a relevant provider being a person who is:
- a
financial services licensee (AFS licensee)
- an
authorised representative, an employee or director of an AFS licensee or
- an
employee or director of a related body corporate of an AFS licensee who is
authorised to provide personal advice to retail clients, as the licensee or on
behalf of the licensee, in relation to relevant financial products.[47]
For the purposes of Part 7.6 of the Corporations Act,
relevant financial products are financial products other than basic
banking products, general insurance products, consumer credit insurance or a
combination of any of those products.[48]
Diagram 2 below shows the current regulatory arrangements.
Diagram 2: current regulatory arrangements
Source: Treasury,
Lifting
the professional, ethical and education standards in the financial services
industry, Consultation paper, March 2015, p. 9.
Education and training
The Bill imposes four education and training standards:
- first,
the person must have completed a bachelor or higher degree, or equivalent
qualification, approved by the standards body or have completed a foreign
qualification which has been approved by the standards body[49]
- second,
the person must have passed an exam approved by the standards body[50]
- third,
the person must have undertaken at least one year of work and training that
meets the requirements set by the standards body[51]
and
- fourth,
the person must meet the requirements for continuing professional development
set by the standards body.[52]
A person
who is undertaking work and training in accordance with the third standard is a
provisional relevant provider.[53] A provisional relevant provider must be supervised by a relevant provider who must approve, in
writing, any Statement of Advice provided by the provisional relevant provider
to a retail client.[54] The Bill sets out the various obligations for
supervisors.[55] According to the Explanatory Memorandum to the Bill:
These requirements are designed to
ensure that there is a direct relationship between a supervisor and the
provisional relevant provider...
There is little detail about the first
requirement ... for appropriate supervision ... in the Corporations Act.
Instead, the Corporations Act merely sets out the general principle and
the [standards] body will be responsible for “unfolding” the general principle
and providing further details or guidance about what amounts to appropriate
supervision. This approach ensures that specific technical requirements are set
by the body with specialist knowledge and the requirements can be more easily
updated when practices change.[56]
The Bill provides for the banning or disqualification of a
person who has not complied with one or more of their supervisory obligations.[57]
ASIC must not grant a person
an AFS License that covers the provision of personal advice to retail clients
in relation to relevant financial products if the person has not met any one or
more of the education and training standards.[58]
Existing section 916A of the Corporations Act
allows an AFS Licensee to authorise another person (called an authorised
representative) to provide a specified financial service on their
behalf. Where an authorised representative is a corporation, section 916B of
the Corporations Act provides that the corporation may, with the consent
of the AFS licensee, authorise an individual/s to provide specified financial
services on behalf of the licensee.[59]
This is called sub-authorisation. However, an authorised representative
who is an individual cannot authorise another individual to be an authorised
representative.[60]
The Bill provides that such an authorisation or
sub-authorisation must not be given to a person who does not:
- satisfy
the first three education and training standards or
- satisfy
the first two standards and is undertaking work and training in accordance with
the third standard.[61]
The Bill provides for the banning or disqualification of a
person who has been authorised to provide personal advice to retail clients but
has not met the education and training standards.[62]
The Bill
inserts the term CPD year (being a
continuing professional development year) into the Corporations Act.[63] A relevant provider must meet the requirements for
continuing professional development set by the standards body during the
licensee’s CPD year.[64]
Item 2 of the Bill amends paragraph 912A(1)(f) of
the Corporations Act so that one of the general obligations of an AFS
Licensee is to ensure that its representatives are adequately trained
(including by complying with the requirement for continuing professional
development). This rule does not apply to a provisional relevant provider.[65]
Stakeholder comments
Whilst the requirement for a uniform minimum level of
education was strongly supported, views differed as to what that should be.
Currently the minimum education level is AQF5—which is a
diploma-level qualification.[66]
The Australian Bankers’ Association supported ‘increasing the mandatory minimum
educational standard for financial advisers to a degree or degree equivalent
qualification ... with core and sector specific requirements set by the standards
setting body’.[67]
The Commonwealth Bank agreed.[68]
According to the Institute of Public Accountants there are
three main implications of requiring advisers to hold a relevant bachelor
degree:
First, consideration must be given to the inclusion and
treatment of existing advisers who do not hold a degree but have significant
experience in the ‘university of life’.
Second, consideration must be given to the capacity of the
university system to cater for the expected increase in their programs,
including the development of conversion courses. The Institute believes that
existing university providers of financial planning degrees would be able to
meet the demand, with additional entrance likely to commence offering degrees.
Third, a consistent approach to any ‘gap’ analysis conducted
across the industry for those that may have completed other degrees. The
institute is concerned that human nature is to do the bare minimum and that
some advisers and licensees will be more aggressive rather than conservative in
recognising prior learning.[69]
Whilst Kaplan Australia supported the higher minimum
education level it was mindful of the additional cost:
Currently, the Diploma of Financial Planning retails for
between $800 and $1500 for the entire award. A bachelor degree can start in
price from $15,000 per year (Equivalent Full Time Student Load). This increase
in cost could potentially affect supply of financial advisers, at least in the
short term.[70]
The SMSF Association noted that increasing the education
and registration requirements:
... may prove a barrier to entry to the financial advice market
for new and some existing financial advisers. This would be expected as a
natural consequence of lifting standards and entry requirements for financial
advisers ...
This is to be an expected trade-off for improving financial
advice standards and is acceptable if the consumer benefit of higher quality
and competent financial advice is realised.[71]
The requirement to undertake continuing professional
development already exists for legal practitioners. BT Financial Group went so
far in its submission to Treasury as to recommend a Practising Certificate
(similar to that issued to legal professionals) be introduced for financial
planners on the grounds that the Certificate ‘would give consumers confidence
that their financial planner meets all the relevant requirements’.[72]
However, the Bill does not contain such a requirement.
Application provisions
Item 27 of the Bill inserts proposed Part
10.23A—Transitional provisions relating to the Corporations Amendment
(Professional Standards of Financial Advisers) Act 2016 into Chapter 10 of
the Corporations Act.
The application provisions in Part 2 of the Bill define
the term existing provider as a person who:
- is
a relevant provider at any time between 1 January 2016 and 1 January 2019
and is not banned, disqualified or suspended on 1 January 2019 or
- at
any time between 1 January 2016 and 1 January 2019,
provides personal advice in a foreign country to retail clients in relation to
relevant financial products and is not prohibited under the law of the foreign
country from providing such advice on 1 January 2019.[73]
The Bill provides that an existing provider must have met
the first education and training standard by 1 January 2024—that
is, the person must have completed a bachelor or higher degree, or equivalent
qualification, approved by the standards body or have completed a foreign
qualification which has been approved by the standards body.[74]
In addition, an existing provider must have met the second
education and training standard before 1 January 2021—that is,
the person must have passed an exam approved by the standards body.[75]
Ethical standards
The standards body must, by legislative instrument, make a
code of ethics.[76]
A relevant provider must comply with the Code of Ethics.[77]
According to the PJC inquiry no. 2, ‘adoption and implementation of codes of
ethics would help to move the financial advice industry towards a resilient
professional culture that would lead to consistent ethical behaviour’.[78]
The submission by Estplan explains the problem to be
remedied as follows:
A framework to increase professional, educational and ethical
standards is important, however this framework needs to refocus adviser mindset
from being a product salesperson to becoming a genuine service provider for
consumers. Part of this needs to address the influence that fund managers have
on the industry and the incentive programs offered by these to advisers. This
drives advisers to make decisions in their own best interest rather than that
of the client.[79]
Consultation
Before making a code of ethics, the standards body must
consult relevant stakeholders including financial services licensees, relevant
providers, associations representing consumers of financial services,
professional associations, ASIC and the Department[80]
and any other relevant body or person.[81]
The Bill deems the requisite consultation to have occurred if, before making
the legislative instrument, the standards body makes the proposed legislative
instrument, or a description of its content, available on its website and
invites comment from those persons and bodies.[82]
The requirement for consultation applies in equivalent
terms if the standards body intends to make determinations by legislative
instrument about any of the elements of the education and training standards
and the Code of Ethics.[83]
Comments by the Scrutiny of Bills Committee
Review of decisions
The Scrutiny of Bills Committee (the Committee) noted that
no explanation has been provided as to whether decisions of the standards body
in fulfilling its functions to develop education standards and the Code of
Ethics will be subject to judicial review—this is especially important as the Administrative
Decisions (Judicial Review) Act 1977 does not apply to decisions of a
legislative nature. In addition, the corporate status of the standards body may
mean that it does not qualify as ‘an officer of the Commonwealth’ and so may
not be susceptible to review under section 39B of the Judiciary Act 1903.
Accordingly, the Committee has sought the Minister’s advice as to whether, and
under what jurisdiction, the standards body’s decisions will be subject to
judicial review.[84]
Delegation of legislative power
Proposed section 921U sets out the functions of the
standards body including the making of legislative instruments. The Committee acknowledged that this section may be characterised as a
framework provision, in that it allows the proposed standards body to provide
for many important details of the new regulatory scheme for financial advisers
to be set out in the legislative instrument, rather than on the face of the
Bill. The Committee accepted the explanation set out in the Explanatory
Memorandum in respect of proposed subsection 921U(5) (which relates to
the setting of requirements for provisional relevant providers).[85]
However, the Committee expressed concern in relation to proposed
subsections 921U(3) and (4), which are described as Henry VIII clauses as
together they allow the operation of the Corporations Act to be modified
by delegated legislation.[86]
The Committee noted that such clauses ‘may subvert the appropriate relationship
between the Parliament and the Executive branch of government’.[87]
The Committee has sought the advice of the Minister as to the rationale for
allowing these clauses.
Compliance schemes
Requirement
for membership in a compliance scheme
The model which arose out of PJC
inquiry no. 2 essentially placed responsibility for establishing a code of
ethics and monitoring compliance with the code with the relevant professional
associations. As stated above, the Bill does not reflect this. Instead, the
Bill provides for a compliance scheme which is to monitor
and enforce compliance with the Code of Ethics by a relevant provider. A
compliance scheme must have a name and must name the monitoring body for the
scheme.[88]
A relevant
provider—whether an AFS licensee or a relevant provider authorised
to provide personal advice to retail clients on behalf of an AFS licensee, in
relation to relevant financial products—must be covered by a compliance scheme.[89]
The coverage must commence within 30 business days of either:
- the
day the person becomes a relevant provider or
- where
the relevant provider was previously covered by a scheme which has since ceased
to cover him or her, —the day that compliance scheme cover ceased.[90]
Approval
of compliance schemes
A monitoring body for a compliance scheme may make an
application to ASIC for approval of the compliance scheme setting out:
- the
name of the monitoring body
- how
compliance with the Code of Ethics by relevant providers covered by the scheme
will be monitored
- the
sanctions imposed on relevant providers for failures to comply with the Code of
Ethics
- how
it is proposed to resolve disputes between the monitoring body and relevant
providers and
- the
arrangements for making complaints to the monitoring body about a failure, or
possible failure, by a relevant provider to comply with the Code of Ethics.[91]
ASIC may approve the scheme, either with or without
conditions, where it is satisfied that the monitoring body has sufficient
resources and expertise to appropriately monitor and enforce compliance with
the Code of Ethics—and that it will appropriately monitor and enforce
compliance of the Code of Ethics under the scheme.[92]
While the approval is in force, the monitoring body must ensure that the scheme
is publicly available.[93]
If ASIC considers that compliance with the Code of Ethics
is not being appropriately monitored or enforced, that the monitoring body has
not complied with the obligations set out in proposed Division 8B, or
that the monitoring body does not have the resources or expertise to
appropriately monitor or enforce compliance, then ASIC may revoke an approval,
vary a condition of the approval or impose additional conditions relating to
the approval of the compliance scheme.[94]
Modification and review of a compliance scheme
Once a compliance scheme has been approved by ASIC, the
monitoring body for the scheme may, by written notice given to ASIC, propose to
modify the scheme. The notice must set out the text of the proposed
modification and explain its purpose.[95]
Within 28 days beginning on the day ASIC receives the
notice, ASIC may, by written notice given to the monitoring body, disallow all
or part of the proposed modification. If ASIC disallows the proposed
modification within that period, the proposed modification does not take
effect.[96]
Otherwise, the proposed modification takes effect at the end of the 28‑day
period.[97]
A monitoring body for a compliance scheme must initiate a
review of the scheme before the end of the five-year period beginning on the
day ASIC approves the scheme and each subsequent five-year period. As soon as
reasonably practical after the review has been completed, the monitoring body
must make the review publicly available and give a copy of the review to ASIC.[98]
Being covered by a compliance scheme
Under the Bill, a compliance scheme covers a
relevant provider if:
- an
ASIC approval for the compliance scheme is in force
- the
notice lodged with ASIC for the purpose of the Register of Relevant Providers
advised that the relevant provider would be covered by the scheme[99]
and
- the
monitoring body for the compliance scheme is a professional association—the
relevant provider is a member of that association.[100]
Investigation by the monitoring body
The monitoring body must not be an AFS licensee or an
associate of an AFS licensee.[101]
If the monitoring body for a compliance scheme becomes
aware of a failure, or possible failure, by the relevant provider to comply
with the Code of Ethics, it must notify the relevant provider that it has
become so aware and, after investigation, it will make a determination, in
writing, about whether a failure to comply with the Code of Ethics has
occurred.[102]
In conducting its investigation, the monitoring body may
request, in writing, information, documents or any other reasonable assistance,
within a reasonable specified period from the AFS licensee on whose behalf the
relevant provider provides advice, the relevant provider or an authorised
representative who gave a sub-authorisation to the relevant provider.[103]
It is an offence if the person fails to comply with the request within the
period specified.[104]
The monitoring body must make the determination within a
reasonable period of becoming aware of the failure, or possible failure, by the
relevant provider to comply with the Code of Ethics. The exception to this rule
is where the relevant provider notifies the monitoring body that it intends to move
to another compliance scheme. In that case the determination must be made within
160 days of receiving the notice.[105]
A relevant provider commits an offence by leaving a compliance scheme before an
investigation is completed.[106]
A person commits an offence if the person is a monitoring
body for a compliance scheme and the person uses or discloses information which
has received in accordance with subsection 70‑40(3AA) of the Tax
Agent Services Act 2009 for a purpose other than monitoring or enforcing
compliance with the Code of Ethics. The maximum
penalty is 10 penalty units which is equivalent to $1,800.[107]
Where a monitoring body for a compliance scheme determines
that the relevant provider has failed to comply with the Code of Ethics or the
monitoring body imposes a sanction on the relevant provider in relation to such
a failure, the monitoring body must notify the licensee within 30 days after
making the determination or imposing the sanction.[108]
Register of relevant providers
PJC inquiry no. 2
PJC inquiry no. 2 considered it essential that a public
register of financial advisers be developed on the grounds that such a register
would play a part in ‘ensuring that financial advice provided to customers and
investors is only provided by suitably qualified professionals’.[109]
On 16 February 2015, the Government registered the Corporations
Amendment (Register of Relevant Providers) Regulation 2015 which created a
public register of all natural persons providing personal advice on more
complex products to retail clients.[110]
The terms of the regulation have now been incorporated into the Corporations
Regulations 2001 (at Schedule 8D).
Terms of the Bill
The amendments in the Bill in relation to the Register of
Relevant Providers are in near-equivalent terms to those in the Regulations
with some additional details required. The Bill is consistent with the
recommendations of the PJC inquiry no. 2 in relation to the Register.[111]
Item 16 of the Bill inserts proposed Subdivision
C into Division 9 of Part 7.6 of the Corporations Act. Division 9 in
its current form is about registers relating to financial services.
Proposed Subdivision C requires ASIC to enter
details on a Register of Relevant Providers in respect of each person who is,
or was, a relevant provider and sets out the details that must be entered on
the Register.[112]
Those details include, but are not limited to:
- the
relevant provider's name and principal place of business[113]
- the
relevant provider’s date and place of birth[114]
- the
recent advising history of the relevant provider (see discussion below)[115]
- if
the relevant provider has been disqualified from managing
corporations—information contained on the Register of disqualified company
directors and other officers[116]
- if
the relevant provider has been banned or disqualified under the National Consumer
Credit Protection Act 2009—information about that banning or
disqualification[117]
- if
the relevant provider has been banned, disqualified or suspended under the Superannuation
Industry (Supervision) Act 1993—information about that banning,
disqualification or suspension[118]
- information
about the educational qualifications of, and any training courses completed by,
the relevant provider to the extent that the qualifications and training
courses are relevant to the provision of financial services[119]
- the
name of the compliance scheme that is to cover the relevant provider.[120]
Proposed Subdivision B sets out
the information to be given to ASIC about a relevant provider. The requirements
are consistent with the information that is to be held in the Register of
Relevant Providers.[121]
As stated above, ASIC is to be advised of the recent
advising history of a relevant provider. Where the relevant provider
is, or was, a financial services licensee authorised to provide personal advice
to retail clients in relation to relevant financial products—the information must
be provided for each period during which the relevant provider was such a
licensee. Equivalent information is required in relation to an authorised
representative.[122]
Ongoing
obligation to notify ASIC
The Bill also sets out a number of
ongoing obligations to notify ASIC of certain information.[123] A failure to comply with the
obligation to notify ASIC gives rise to an offence. The maximum penalty for the
offence is 50 penalty units which is equivalent to $9,000.[124]
Restriction on the use of the term
financial adviser
Current law
Currently, section 766A of the Corporations Act provides
that a person provides a financial service if they:
- provide
financial product advice
- deal
in a financial product
- make
a market for a financial product
- operate
a registered scheme
- provide
a custodial or depository service or
- engage
in conduct of a kind prescribed by regulations.
Financial product advice is a recommendation
or a statement of opinion that is intended to influence a person in making a
decision about a particular financial product or class of financial products,
or an interest in a particular financial product or class of financial products
or could reasonably be regarded as being intended to have such an influence.[125]
Personal advice is financial product advice
that is given to a person (including by electronic means) in circumstances
where the provider of the advice has considered one or more of the person’s
objectives, financial situation and needs or a reasonable person might expect
the provider to have considered one or more of those matters.[126]
General advice is financial product advice
that is not personal advice.[127]
PJC inquiry no. 2
The PJC inquiry no. 2 noted that there was a tension between
the sales of financial products and services and the giving of advice about
financial products and services. It was noted that the final report of the
Financial Services Inquiry ‘confirmed that consumers may misinterpret or
excessively rely on guidance, advertising, and promotional and sales material
when it is described as “general advice”. Additionally, the use of the word
“advice” may lead consumers to believe the information is tailored to their
needs’.[128]
The inquiry recommended that the government should introduce
legislation to protect the titles ‘financial adviser’ and ‘financial planner’
and require that, to be eligible to use the title ‘financial adviser’, an
individual must be registered as a financial adviser.[129]
Terms of the Bill
Item 17 of the Bill inserts proposed
section 923C into Division 10 of Part 7.6 of
the Corporations Act, which contains
restrictions on the use of the terms financial
adviser and financial planner. The effect of the
provision is that those terms may not be assumed or used by a person who is not
a relevant provider. The use of the terms by a person who is a provisional
relevant provider or a limited‑service time‑sharing adviser is
specifically prohibited.[130]
In addition, a person (called the first person) contravenes this
restriction if the first person carries on a financial services business or
provides a financial service and another person provides a financial service on
behalf of the person and the first person assumes or uses a restricted word or
expression in relation to the service; and the first person is not a relevant
provider or the first person is a provisional relevant provider or a limited‑service
time‑sharing adviser.[131]
Currently, paragraph 1311(1)(a) of the Corporations Act
provides that a person who does an act or thing that the person is forbidden to
do by the Corporations Act is guilty of an offence. This general rule
will only apply if a penalty, pecuniary or otherwise, is set out in Schedule 3.
A general offence under subsection 1311(1) is punishable by a penalty not
exceeding the maximum penalty prescribed for the offence in Schedule 3 of the Corporations
Act. Accordingly, item 20 of the Bill amends Schedule 3 of the Corporations
Act so that the maximum penalty for a breach of the restriction on the use
of the terms financial adviser and financial planner is 10 penalty units (being
equivalent to $1,800) for each day, or part of a day, in respect of which the
offence is committed.[132]
There are some exceptions to the rule about using a restricted
word or expression. For example, a contravention will not occur where a person
provides advice to wholesale clients and uses the restricted term only in
relation to that advice.[133]
Similarly, a contravention will not occur where a person is an employee or
director of a body, provides advice to the body and uses the restricted term only
in relation to that advice.[134]
Comments by the Scrutiny of Bills Committee
The Committee noted the reversal of the evidential burden
of proof in the context of these exceptions, stating:
Subsection 13.3(3) of the Criminal Code Act
1995 provides that a defendant who wishes to rely on any exception,
exemption, excuse, qualification or justification bears an evidential burden in
relation to that matter.
While the defendant bears an evidential burden (requiring the
defendant to raise evidence about the matter), rather than a legal burden
(requiring the defendant to positively prove the matter), the committee expects
any such reversal of the evidential burden of proof to be justified. The
committee's consideration of the appropriateness of a provision which reverses
the burden of proof is assisted if it explicitly addresses relevant principles
as set out in the Guide to Framing Commonwealth Offences, Infringement
Notices and Enforcement Powers.[135]
As explanatory material for the Bill did not address this
issue, the Committee has sought appropriate justification from the Minister.
Stakeholder comments
Industry Super Australia strongly supported ‘the
enshrinement of “Financial Adviser” in legislation’ on the grounds that it
‘would provide greater clarity on the role and responsibilities of financial
advisers as well as a legal basis for the requirement of a higher minimum
standard’.[136]
Pajeska Group agreed that legislative protection for the term financial planner
is necessary ‘as a higher degree of care is associated with performing the
duties of a financial planner’.[137]
On the other hand the SMSF Association did not signal the
need for the terms to be protected by legislation.
With registration limited to those that have met the relevant
standards, the term “financial adviser” should be limited to those that have
met the relevant standards and are registered.
We do not believe that “financial planner” is needed as a
protected generic term for advisers as this would cause confusion for
consumers, as financial planning is a specialisation of the broader area of
financial advice.[138]
Other provisions
Amendments to the Tax Agent Services Act
The Tax Agent Services Act:
- establishes
the national Tax Practitioners Board (the Board) to register fit and proper
persons with the appropriate qualifications and experience as registered tax
agents or BAS agents[139]
- introduced
a Code of Professional Conduct (the Code) to regulate the personal and
professional conduct of a registered tax agent or BAS agent
- provided
for sanctions to be imposed by the Board for failure to comply with the Code
- provided
for termination of registration by the Board if a person ceases to meet the tax
practitioner registration requirements and
- provides
for civil penalties if an unregistered person provides tax agent services or
BAS services for a fee, advertises that such services can be provided or makes
representations that such services can be provided.[140]
According to the Explanatory Memorandum:
The Board is responsible for enforcing compliance with the
Code of Professional Conduct in Part 3 of the [Tax Agent Services Act]. The
Code of Professional Conduct in the [Tax Agent Services Act] applies to
tax agents, BAS agents and tax financial advisers. Many of the approximately
20,000 tax financial advisers are also relevant providers, and as such they
will be bound by both the new body’s Code and the Code of Professional Conduct
in the [Tax Agent Services Act.] [141]
The Bill amends the Tax Agent Services Act to:
- require
the Board to notify the relevant monitoring body of the outcome of all
investigations which relate to persons who are also relevant providers[142]
and
- empower
the Board to request additional information from monitoring bodies about the
monitoring body’s compliance scheme or the compliance of a relevant provider
with the Code or the Code of Professional Conduct in the Tax Agent Services
Act.[143]
The Board has the power to share any information,
including official information, with monitoring bodies if the information is
provided to monitoring bodies for the purposes of monitoring or enforcing
compliance with the new Code. The Bill creates an exemption from the general
prohibition in section 70–35 of the Tax Agent Services Act on the
disclosure by the Board of official information.[144]
Item 26 of the Bill amends the Dictionary in the Tax
Agent Services Act so that the terms Code of Ethics, compliance
scheme, covers and monitoring body have the
same meaning as in Part 7.6 of the Corporations Act.
Concluding comments
Although the Bill does not put into effect all the actual
recommendations of PJC inquiry no. 2—particularly with regard to the
establishment of a Financial Professionals Education Council—it does implement
the spirit of the recommendations which were the centrepiece of the PJC’s
report. The Bill applies to an individual who is:
a
financial services licensee (AFS licensee)
an
authorised representative, an employee or director of an AFS licensee or
an
employee or director of a related body corporate of an AFS licensee and
who is authorised to provide personal advice to retail
clients, as the licensee or on behalf of the licensee, in relation to relevant
financial products.
It ensures that education standards are sufficiently high
to improve the competency of members of the financial services industry. In
addition, the proposed Code of Ethics should address issues relating to culture
which have been identified as so problematic in the past.
The Bill operates so that the Register of Relevant
Providers will contain relevant information so that members of the public will
be able to ensure that the person who is providing them with financial advice
satisfies the higher education and ethical standards.
Finally, the Bill restricts the use of the titles
‘financial adviser’ and ‘financial planner’ so that they can only be used by
persons who are relevant providers. This should go some way to repairing the
loss of public confidence in the finance industry.
[1]. A
comprehensive list of the enquiries is contained in the report of the Parliamentary
Joint Committee on Corporations and Financial Services (PJCCFS), Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, Canberra, December 2014,
pp. 3–15.
[2]. Australian
Securities and Investments Commission (ASIC), ‘FOFA—background
and implementation’, ASIC website.
[3]. Inquiry
homepage, PJCCFS, ‘Inquiry into financial products and services in
Australia’.
[4]. PJCCFS,
Inquiry
into financial products and services in Australia, media release,
23 November 2009.
[5]. PJCCFS,
Inquiry
into financial products and services in Australia: terms of reference.
[6]. Further
information about the originating Bills, including links to the debate, the
Bills Digests and committee consideration are available at the Bills homepages:
Parliament of Australia, ‘Corporations
Amendment (Future of Financial Advice) Bill 2012 homepage’, Australian
Parliament website; and Parliament of Australia, ‘Corporations
Amendment (Further Future of Financial Advice Measures) Bill 2012 homepage’,
Australian Parliament website.
[7]. Treasury,
‘Future
of Financial Advice: implementation’, Treasury website; B Shorten (Minister
for Financial Services and Superannuation), Government's
financial advice reforms pass the parliament, media release,
20 June 2012. Note that some of the FOFA measures were rolled
back by the Corporations
Amendment (Financial Advice Measures) Act 2016. For information about
the originating Bill, see Parliament of Australia, ‘Corporations
Amendment (Financial Advice Measures) Bill 2016 homepage’,
Australian Parliament website.
[8]. Financial
System Inquiry, Financial
system inquiry, Final report, (Murray Report), Commonwealth of
Australia, Canberra, November 2014, p. 223.
[9]. Ibid.,
p. 218.
[10]. Ibid.,
recommendation 25, p. 28, 222; and recommendation 40, p. 195, 271.
[11]. Details
of the terms of reference, submissions to the inquiry and the Committee's final
report are available on the inquiry
homepage.
[12]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., recommendation 5,
pp. 29–30.
[13]. Ibid.,
recommendation 7, p. 45.
[14]. Ibid.,
recommendation 8, p. 48.
[15]. Ibid.,
recommendation 9, p. 52.
[16]. Ibid.,
recommendation 11, p. 65.
[17]. Senate
Economics References Committee, Agribusiness
managed investment schemes: bitter harvest, Inquiry report, The Senate,
Canberra, March 2016.
[18]. Ibid.,
p. 111.
[19]. Ibid.,
p. 112.
[20]. Treasury,
Lifting
the professional, ethical and education standards in the financial services
industry, Consultation paper, March 2015.
[21]. Treasury,
‘Lifting
the professional, ethical and education standards in the financial services
industry: submissions’, Treasury website.
[22]. Senate
Standing Committee for Selection of Bills, Report,
10, 2016, The Senate, Canberra, 1 December 2016.
[23]. Senate
Standing Committee for the Scrutiny of Bills, Alert
Digest, 10, 2016, The Senate, 30 November 2016, pp. 4–8.
[24]. C
McGowan, ‘Statements
by members: financial planning’, House of Representatives, Debates,
29 November 2016, p. 4742.
[25]. Industry
Super Australia and Australian Institute of Superannuation Trustees, Submission
to Treasury, Lifting
the professional, ethical and educational standards in the financial services
industry, (Treasury inquiry), 7 May 2015, p. 5.
[26]. CPA
Australia and Chartered Accountants ANZ, Submission,
Treasury inquiry, p. 3.
[27]. Pajeska
Group Pty Ltd, Submission,
Treasury inquiry.
[28]. Explanatory
Memorandum, Corporations Amendment (Professional Standards of Financial
Advisers) Bill 2016, p. 3.
[29]. Ibid.
[30]. The
Statement of Compatibility with Human Rights can be found at pages 89–90 of the
Explanatory
Memorandum to the Bill.
[31]. Parliamentary
Joint Committee on Human Rights, Report,
10, 2016, Canberra, 30 November 2016, p. 8.
[32]. Corporations
Act, section 911A.
[33]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., recommendation 10, p. xv.
[34]. Ibid.,
recommendation 11, p. 32.
[35]. Bell
Potter Securities Ltd, Submission,
Treasury inquiry, p. 1.
[36]. Corporations
Act, proposed subsection 921X(1). Generally, unlike legislative
instruments, notifiable instruments are not subject to Parliamentary scrutiny,
nor are they subject to automatic repeal 10 years after registration. Legislation Act
2003, section 7.
[37]. Corporations
Act, proposed paragraph 921X(2)(a) and proposed subparagraph
921X(2)(c)(ii) respectively.
[38]. Corporations
Act, proposed subparagraph 921X(2)(c)(iv).
[39]. Corporations
Act, proposed subparagraph 921X(2)(c)(v).
[40]. Corporations
Act, proposed subparagraph 921X(2)(c)(vi).
[41]. Corporations
Act, proposed subparagraph 921X(2)(c)(vii).
[42]. Choice,
Submission,
Treasury inquiry.
[43]. Corporations
Act, proposed subparagraphs 921X(2)(c)(viii) and (ix).
[44]. Corporations
Act, proposed section 921Z.
[45]. Corporations
Act, proposed section 921ZA.
[46]. Corporations
Act, proposed section 921Y.
[47]. Item
1 of the Bill inserts the definition of relevant provider
into section 910A of the Corporations Act.
[48]. Item
1 of the Bill inserts the definition of relevant financial products
into section 910A of the Corporations Act.
[49]. Corporations
Act, proposed subsection 921B(2). Note that currently ASIC’s Licensing:
training of financial product advisers, Regulatory guide, 146, July
2012, sets out the minimum knowledge, skill and education standards for
financial advisers and provides information on how advisers can meet these
standards. However, according to the Explanatory Memorandum to the Bill, ‘the
current standards in RG146 are not commensurate with the level required to
ensure appropriate technical and professional competence’. Explanatory
Memorandum, op. cit.,
p. 6.
[50]. Corporations
Act, proposed subsection 921B(3).
[51]. Corporations
Act, proposed subsection 921B(4).
[52]. Corporations
Act, proposed subsection 921B(5).
[53]. Item
1 of the Bill inserts the definition of provisional relevant provider
into section 910A of the Corporations Act.
[54]. Corporations
Act, proposed subsections 921F(2) and (4).
[55]. Corporations
Act, proposed subsections 921F(2)–(6).
[56]. Explanatory
Memorandum, Corporations Amendment (Professional Standards of Financial
Advisers) Bill 2016, pp. 19–20.
[57]. Item
10 of the Bill inserts proposed paragraphs 920A(1)(db) and (dc) into
section 920A of the Corporations Act.
[58]. Corporations
Act, proposed subsection 921C(1).
[59]. Corporations
Act, subsection 916B(3).
[60]. Corporations
Act, subsection 916B(1).
[61]. Corporations
Act, proposed subsections 921C(2)–(4).
[62]. Item
10 of the Bill inserts proposed paragraph 920A(1)(de) into section
920A of the Corporations Act.
[63]. Item
1 of the Bill inserts the definition of CPD year into section
910A of the Corporations Act. A financial
services licensee’s CPD year is the 12‑month period
beginning on the day of the year included in the most recent notice given by
the licensee under proposed section 922HA.
[64]. Corporations
Act, proposed subsection 921D(1).
[65]. Corporations
Act, proposed subsection 921D(2).
[66]. CPA
Australia and Chartered Accountants ANZ, Submission,
Treasury inquiry, 7 May 2015, p. 8.
[67]. Australian
Bankers’ Association, Submission,
Treasury inquiry, 7 May 2015, p. 5.
[68]. Commonwealth
Bank of Australia, Submission,
Treasury inquiry, 13 May 2015, p. 3.
[69]. Institute
of Public Accountants, Submission,
Treasury inquiry, May 2015, p. 6.
[70]. Kaplan
Professional, Submission,
Treasury inquiry, p. 3.
[71]. SMSF
Association, Submission,
Treasury inquiry, 12 May 2015, p. 3.
[72]. BT
Financial Group, Submission,
Treasury inquiry, 7 May 2015, p. 7.
[73]. Corporations
Act, proposed section 1546A.
[74]. Corporations
Act, proposed subsection 1546B(1).
[75]. Corporations
Act, proposed subsection 1546B(3).
[76]. Corporations
Act, proposed subsection 921U(2).
[77]. Corporations
Act, proposed section 921E.
[78]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., p. 65.
[79]. Estplan,
Submission,
Treasury inquiry, pp. 1–2.
[80]. According
to section 19 A of the Acts
Interpretation Act 1901, where an act refers to a Department without
identifying the Department then the reference is to the Department that is
administered by the Minister in relation to the relevant matter. In this case
the Department is Treasury.
[81]. Corporations
Act, proposed subsection 921U(6).
[82]. Corporations
Act, proposed subsection 921U(7).
[83]. Corporations
Act, proposed subsections 921U(2) and (6).
[84]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 10, 2016, op. cit., p. 4.
[85]. Ibid.,
p. 5.
[86]. A
Henry VIII clause is a provision in an enabling statute that
provides that delegated legislation made pursuant to it overrides earlier
statutes or the enabling statute itself in the event of an inconsistency. Source:
Butterworths concise Australian legal dictionary, 3rd edition,
LexisNexis Butterworths, Australia, 2004, p. 199.
[87]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 10, 2016, op. cit., p. 5.
[88]. Corporations
Act, proposed subsections 921G(7) and (4) respectively.
[89]. Corporations
Act, proposed subsection 921H(1).
[90]. Corporations
Act, proposed subsection 921H(2).
[91]. Corporations
Act, proposed subsection 921K(2).
[92]. Corporations
Act, proposed subsections 921K(4) and (5).
[93]. Corporations
Act, proposed section 921P. A person who is a monitoring body
commits an offence if the scheme is not publicly available. The maximum penalty
is 10 penalty units which is equivalent to $1,800.
[94]. Corporations
Act, proposed subsections 921K(7) and (9).
[95]. Corporations
Act, proposed subsections 921R(1) and (2).
[96]. Corporations
Act, proposed subsections 921R((3), 4) and (5).
[97]. Corporations
Act, proposed subsections 921R(6).
[98]. Corporations
Act, proposed section 921S.
[99]. Corporations
Act, proposed section 922D.
[100]. Corporations
Act, proposed section 921J.
[101]. Corporations
Act, proposed subsection 921G(3).
[102]. Corporations
Act, proposed subsections 921L(1) and (2). It is an offence
for a person who is a monitoring body to fail to notify the relevant provider
of its investigation. The maximum penalty is 10 penalty units which is
equivalent to $1,800: proposed subsection 921M(1).
[103]. Corporations
Act, proposed subsection 921L(3).
[104]. Corporations
Act, proposed subsection 921M(2). The maximum penalty is 10 penalty
units which is equivalent to $1,800.
[105]. Corporations
Act, proposed subsection 921L(5). It is an offence for a
person who is a monitoring body to fail to make the required determination. The
maximum penalty is 10 penalty units which is equivalent to $1,800: proposed
subsection 921M(1).
[106]. Corporations
Act, proposed subsection 921M(3). The maximum penalty is 10 penalty
units which is equivalent to $1,800.
[107]. Corporations
Act, proposed subsection 921L(7).
[108]. Corporations
Act, proposed section 921N.
[109]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., p. 26.
[110]. ASIC,
‘AFS
licensees: financial advisers register’, ASIC website.
[111]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., recommendation 5,
pp. 29–30.
[112]. Corporations
Act, proposed subsections 922Q(1) and (2).
[113]. Corporations
Act, proposed paragraphs 922Q(2)(a) and (b).
[114]. Corporations
Act, proposed paragraph 922Q(2)(e).
[115]. Corporations
Act, proposed paragraph 922Q(2)(i).
[116]. Corporations
Act, proposed paragraph 922Q(2)(n).
[117]. Corporations
Act, proposed paragraph 922Q(2)(o).
[118]. Corporations
Act, proposed paragraph 922Q(2)(p).
[119]. Corporations
Act, proposed subparagraph 922Q(2)(u)(i).
[120]. Corporations
Act, proposed paragraph 922Q(2)(v).
[121]. Corporations
Act, proposed sections 922E and 922F.
[122]. Corporations
Act, proposed section 922G.
[123]. Corporations
Act, proposed sections 922H–922HB and 922HD–922L.
[124]. Corporations
Act, proposed section 922M.
[125]. Corporations
Act, subsection 766B(1).
[126]. Corporations
Act, subsection 766B(3).
[127]. Corporations
Act, subsection 766B(4).
[128]. PJCCFS,
Inquiry
into proposals to lift the professional, ethical and education standards in the
financial services industry, op. cit., p. 19.
[129]. Ibid.,
recommendation 4, p. 26.
[130]. Item
1 of the Bill inserts the term limited-service time-sharing adviser
into section 910A of the Corporation Act. A person is a limited-service
time-sharing adviser if the person is a relevant provider, the only
relevant financial product that the person provides advice about is a
time-sharing scheme and the person has not met any one or more of the education
and training standards.
[131]. Corporations
Act, proposed subsection 923C(2).
[132]. Corporations
Act, Schedule 3, proposed table items 269AAA and 269AAB.
[133]. Corporations
Act, proposed subsection 923C(3).
[134]. Corporations
Act, proposed subsection 923C(5).
[135]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 10, 2016, op. cit., pp. 7, 8.
[136]. Industry
Super Australia and Australian Institute of Superannuation Trustees, Submission,
Treasury inquiry, 7 May 2015, p. 10.
[137]. Pajeska
Group Pty Ltd, Submission,
Treasury inquiry, 7 May 2015.
[138]. SMSF
Association, Submission,
Treasury inquiry, 12 May 2015, p. 29.
[139]. Tax
Agent Services Act, Division 60, Part 6.
[140]. B
Pulle, Tax
Agent Services Bill 2008, Bills digest, 64, 2008–2009, Parliamentary
Library, Canberra, 2008, p. 5.
[141]. Explanatory
Memorandum, Corporations Amendment (Professional Standards of Financial
Advisers) Bill 2016, p. 44.
[142]. Items
22 and 23 of the Bill insert proposed subparagraphs 60-125(8)(c)(v) and
60-125(8)(d)(iv) into the Tax Agent Services Act respectively.
[143]. Item
24 of the Bill inserts proposed section 70-34 into the Tax Agent
Services Act.
[144]. Item
25 of the Bill inserts proposed subsection 70-40(3AA) into the Tax
Agent Services Act.
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