Implementing the Recommendations of the Banking Royal Commission – Legislative Agenda


Implementing the Recommendations of the Banking Royal Commission – Legislative Agenda

On Monday 19 August 2019, the Federal Treasurer, The Hon Josh Frydenberg MP , released the “Implementation Road map” detailing the timetable for implementing the reforms recommended in the Financial Services Royal Commission’s Final Report. The Road map has been issued by Federal Treasury.

The implementation road map is a detailed and comprehensive document.

There is one part of the road map we would like to share with clients and that is the legislative agenda for 2019, 2020 and beyond – breathtaking in its scope.

We have extracted the legislative reform agenda for the Treasury document and now extract it below – verbatim.

As each piece of legislation is issued We will provide detailed commentary at the time each item of legislation is introduced or the consultation process commences.

APPENDIX A: GOVERNMENT IMPLEMENTATION PLAN

In this table, timelines are set out for Government actions, including for introduction of legislation where relevant.

Legislation to be consulted on and introduced by end-2019
Measures to improve consumer protections
  • Recommendation 1.2 – Mortgage broker best interests duty
  • Recommendation 1.3 – Mortgage broker remuneration (consistent with the Government’s response)
  • Recommendation 2.4 – Ending grandfathered commissions for financial advisers (legislation introduced on 1 August 2019)
  • Recommendation 4.2 – Removing the exemptions for funeral expenses policies
  • Recommendation 4.7 – Application of unfair contract terms provisions to insurance contracts
  • Recommendation 4.8 –  Removal of claims handling exemption for insurance
Measures to strengthen financial regulators
  • Additional Commitment – ASIC’s search warrants powers (ASIC Enforcement Review)
  • Additional Commitment – ASIC’s telecommunications interceptions powers (ASIC Enforcement Review)
  • Additional Commitment – ASIC’s licensing powers (ASIC Enforcement Review)
  • Additional Commitment – ASIC’s power to ban people in the financial sector (ASIC Enforcement Review)

 

Legislation to be consulted on and introduced by 30 June 2020
Measures to improve consumer protections
  • Recommendation 1.7 – Removal of point-of-sale exemption
  • Recommendation 1.15 – Enforceable code provisions for industry codes of conduct
  • Recommendation 2.1 – Annual renewal and payment for financial advice
  • Recommendation 2.2 – Disclosure of lack of independence of financial advisers
  • Recommendation 3.1 – No other role or office for trustees of Registrable Superannuation Entities (RSE)
  • Recommendation 3.2 – No deducting advice fees from MySuper accounts
  • Recommendation 3.3 – Limitations on deducting advice fees from choice superannuation accounts
  • Recommendation 3.4 – No hawking of superannuation products
  • Recommendation 4.1 – No hawking of insurance products
  • Recommendation 4.3 – Deferred sales model for add-on insurance
  • Recommendation 4.4 – Cap on commissions paid to vehicle dealers for sale of add-on insurance products
  • Recommendation 4.5 – Duty to take reasonable care not to make a misrepresentation to an insurer
  • Recommendation 4.6 – Limiting circumstances where insurers can avoid life insurance contracts
  • Recommendation 4.8 – Removal of claims handling exemption
  • Additional commitment in response to Recommendation 4.2 – Restricting use of the term ‘insurer’ and ‘insurance’
Measures to strengthen financial regulators
  • Recommendation 1.6 – Reference checking and information sharing for mortgage brokers
  • Recommendation 2.7 – Reference checking and information sharing for financial advisers
  • Recommendation 2.8 – Licensee obligations to report compliance concerns
  • Recommendation 2.9 – Licensee obligations where misconduct by financial advisers
  • Recommendation 3.8 – Adjustment of APRA’s and ASIC’s roles in superannuation
  • Recommendation 6.3 – General principles for ASIC and APRA to co-regulate superannuation
  • Recommendation 6.4 – ASIC as conduct regulator for superannuation
  • Recommendation 6.5 – APRA to retain current functions for superannuation
  • Recommendation 6.9 – Statutory obligation for APRA and ASIC to co-operate and share information
  • Recommendation 6.14 – A new oversight authority for APRA and ASIC
  • Recommendation 6.11 – Improving ASIC’s Board meeting procedures
  • Recommendation 7.2 – Implementing the ASIC Enforcement Review Taskforce’s recommendations to improve the breach reporting regime
  • Additional commitment in response to Recommendation 7.2 – Implementing the ASIC Enforcement Review Taskforce’s directions power recommendations

 

Legislation to be consulted on and introduced by end-2020
Access to redress and new disciplinary body
  • Recommendation 2.10 – A new disciplinary system for financial advisers
  • Recommendation 7.1 – Compensation scheme of last resort
Measures to strengthen financial regulators − executive accountability regime
  • Recommendation 3.9 – Extending the Banking Executive Accountability Regime (BEAR) to RSE licensees
  • Recommendation 4.12 – Extending the BEAR to APRA-regulated insurers
  • Recommendation 6.6 – Joint administration of the BEAR
  • Recommendation 6.7 – Statutory amendments to facilitate co-regulation
  • Recommendation 6.8 – Extending the BEAR to all APRA-regulated financial services institutions.
  • Additional commitment – extension of the executive accountability regime to non-prudentially regulated financial entities to be administered by ASIC.