In our recent newsletter, we reported on the announcement by ASIC on Monday 23 March 2020 that it was recalibrating its regulatory priorities to focus on COVID-19 challenges.
On Tuesday 14 April 2020 ASIC provided further details of the changes to ASIC regulatory work and priorities in light of COVID-19. It is opportune to review the changes which are coming thick and fast in this rapidly moving environment.
The changes are comprehensive an affect many area of ASIC operations, including:
- Financial Advice
- Managed Funds
- Superannuation
- Credit retail banking and payments
- Insurance
- Market infrastructure and supervision
- Insolvency practitioners
- Financial reporting and audit
Some of the more relevant changes as they affect the finance and advice industry are set out in the numbered paragraphs below. For full details of all the changes please refer to the ASIC information release.
1. Credit, retail banking and payments
ASIC is making the following changes:
- Review of lender responses to consumers experiencing financial difficulty – ASIC is deferring the next stage of this work until 30 September 2020.
- ASIC will be actively engaging with stakeholders on how to approach financial difficulty issues, in particular around hardship requests resulting from the impact of COVID-19.
- Buy now pay later products – ASIC will continue its follow up work, but is deferring the finalisation and release of the follow-up report until further notice.
- Buy now pay later products – ASIC will be engaging with the sector on their responses to COVID-19.
- Review of the ePayments Code – ASIC will continue working on this review, but is deferring the release of its second consultation paper on the Code until the second-half of 2020.
- Debt collection industry review – ASIC is deferring the collection of data for this review until 30 September 2020.
- Guarantee and co-debtor loans industry review – ASIC will continue to monitor developments and analyse the information it has already received. ASIC is deferring the collection of further data for the purposes of this work.
- Fees in deposit and savings account industry review – ASIC is deferring the collection of further data for the purposes of this work.
- Recurrent mortgage data collection pilot – ASIC is deferring its industry engagement activities until further notice.
2. Financial Advice – ASIC grants temporary relief to financial advice industry to facilitate the provision of timely advice in particular with regard to superannuation.
a. Advice in relation to early access to superannuation entitlements
Many members of the public will need advice about whether or not to access their super entitlements early. To facilitate this ASIC, on Tuesday 14 April 2020, announced that it has decided to:
- allow advice providers not to give a statement of advice (SOA) to clients when providing advice about early access to superannuation;
- permit registered tax agents to give advice to existing clients about early access to superannuation without needing to hold an Australian financial services (AFS) licence; and
- allow superannuation trustees to expand the scope of personal advice that may be provided under the auspices of ‘intra-fund advice’, to include early access advice.
The relief granted is temporary and is granted on certain conditions, being:
- clients must be provided with a record of advice (ROA), which meets certain content requirements. An ROA is a shorter, simpler document that sets out the advice that is being provided;
- the advice fee, if any, is capped at $300;
- the advice provider must establish that the client is entitled to the early release of their superannuation; and
- the client must have approached the advice provider for the advice.
b. Statements of Advice for time critical advice allowed to be given within 30 business days (5 business days currently)
This change allows financial advisers to give the urgent advice and not also have to comply with the obligation to provide a Statement of Advice shortly after.
c. Records of Advice to be permitted for existing clients
ASIC will allow “records of advice” (ROA) to be given to existing clients instead of formal “statements of advice” (SOA) A ROA is a shorter, simpler document than a SOA.
d. Relief to be implemented by Legislative Instrument
The relief is being implemented by legislative instrument – ASIC Corporations (COVID-19 – Advice-related Relief) Instrument 2020/355
e. The relief is temporary.
ASIC has stated that while the relief is temporary that it will consult with key stakeholder before revoking the Instrument of relief and provide 30 days’ advance notice of any change to the industry.
3. Additional Financial Advice matters
ASIC is:
- deferring its review of life insurance advice until further notice.
- deferring work on grandfathered conflicted remuneration until further notice.
4. Insurance
ASIC has advised changes in relation to the following matters:
- Consumer credit insurance (CCI) lender review (follow up to REP 622) – Apart from overseeing remediation, ASIC is deferring other follow up work until further notice.
- Total and permanent disability insurance industry responses (follow up to REP 633) – ASIC will contact insurers by the end of April 2020 to seek information about the steps taken so far to meet the expectations outlined in the report.
- Travel insurance review – ASIC is deferring work on this until further notice
5. Corporations
- ASIC has provided a ‘no-action’ position on upcoming AGMs due by 31 May 2020 that need to be deferred or that are held online.
- ASIC is providing temporary relief to allow ‘low doc’ placements, rights issues and share purchase plans to be made to investors, even if they do not meet all the normal requirements.
- Additionally, ASIC is closely monitoring market conditions and COVID-19 developments that may affect financial reporting in general.
