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Recommendations
Recommendation 1
3.64 The committee recommends that subsection 962F(3) of
the Corporations Amendment (Future of Financial Advice) Bill 2011 be reviewed
with a view to providing access to recourse for consumers who have had fees
wrongfully deducted.
Recommendation 2
3.65 The committee recommends that 'minimum disclosure'
guidelines be included in the regulations of the Corporations Amendment (Future
of Financial Advice) Bill 2011 for fee disclosure and opt-in notices,
stipulating a standard for communication between financial advisers and their
retail clients.
Recommendation 3
3.66 The committee recommends that the Explanatory
Memorandum to the Corporations Amendment (Future of Financial Advice)
Bill 2011 be amended to better explain the annual fee disclosure
obligations for existing retail clients.
Recommendation 4
4.70 The committee recommends a revised Explanatory
Memorandum to the Corporations Amendment (Further Future of Financial Advice
Measures) Bill 2011 be issued such that the final sentence in paragraph 1.33 of
the Explanatory Memorandum reads:
'In identifying the advice
that has in effect been sought by the client (including advice implicitly
sought by the client), the provider must take into account the client's
relevant circumstances.'
Recommendation 5
5.37 The committee recommends that regulations pertaining
to paragraph 964A(3) of the Corporations Amendment (Further Future of Financial
Advice Measures) Bill 2011 be drafted to include a materiality threshold
to determine when a benefit is not presumed to be a volume-based shelf-space
fee. The regulations should specify that full disclosure is required for the
payment and receipt of these benefits.
Recommendation 6
5.38 The committee recommends that the Australian
Securities and Investments Commission (ASIC) issue guidance material for
platform operators who seek to substantiate a claim that a volume-based payment
demonstrates a reasonable fee for service or a genuine value of scale
efficiencies.
Recommendation 7
5.65 The committee recommends that the Australian
Securities and Investments Commission (ASIC) conduct shadow shopping exercises
on advice pertaining to life risk insurance outside superannuation post
implementation of the Corporations Amendment (Further Future of Financial Advice
Measures) Bill 2011. ASIC should report its findings back to this
committee within two years of the date the Bill commences.
Recommendation 8
5.80 The committee recommends that post-implementation,
Treasury work with the Australian Securities and Investments Commission (ASIC)
to monitor closely the quality of advice on the sale of risk insurance inside
and outside superannuation and any market distortions that may occur.
Recommendation 9
6.35 The committee recommends that further material be
provided in the Explanatory Memorandum to the Corporations Amendment (Further
Future of Financial Advice Measures) Bill 2011 to outline examples of
legitimate training, such as practice management or client relationship skills.
Legitimate forms of training should also be provided in the regulations.
Recommendation 10
6.39 The committee recommends that the Explanatory
Memorandum for the Corporations Amendment (Further Future of Financial Advice
Measures) Bill 2011 be amended to provide clarity on the application of the
$300 limit for soft-dollar benefits. Further, the committee recommends that
examples of what is and is not deemed to be 'frequent or regular' should be
stated in the Explanatory Memorandum and the regulations.
Recommendation 11
6.45 The committee recommends that the proposed
consultations on the regulations for the Corporations Amendment (Further Future
of Financial Advice Measures) Bill 2011 include consideration of the potential
impact of restricting soft-dollar benefits of professional development to
within Australia and New Zealand.
6.46 The committee recommends that no geographical
restriction be placed on professional development where it is professional
development focussed on education and training.
Recommendation 12
7.17 The committee recommends that the Australian
Securities and Investments Commission (ASIC) provide regulatory guidance
material on how Australian Authorised Deposit-taking Institutions (ADIs) can
prove that remuneration does not 'reasonably influence' advice.
Recommendation 13
7.50 The committee recommends that the Corporations
Amendment (Further Future of Financial Advice Measures) Bill 2011 be amended so
that the Timeshare industry is precluded from the bans on conflicted
remuneration.
Recommendation 14
9.17 The committee recommends that the government should
amend the footnote references to Rice Warner estimates in the regulation impact
statements of the Explanatory Memorandums to both bills. The new footnote
should be updated to reflect Rice Warner's revised estimate of the employment
impact of the Future of Financial Advice reforms.
Recommendation 15
10.45 The committee recommends that there should be an
independent review of the application of the Future of Financial Advice (FOFA)
legislation. The review should be timed to comment constructively on how
stakeholders have complied with, and interpreted the FOFA provisions. To this
end, the committee recommends that an initial report should be given to
government by the end of 2013 and a further report by the end of 2014.
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