The Empire drafts back: Treasury releases proposed legislation in response to Hayne Royal Commission
On Friday 31st January the Treasury released 22 separate draft bills and regulations for consultation, formally responding to 24 of the recommendations made by the Financial Services Royal Commission. Whilst there’s an enormous amount of material to digest from this announcement, we wanted to first explain how this rollout may proceed as the amendments make their way through Parliament. We will provide a more detailed analysis of the proposed changes in the coming weeks.
Proposed timetable
The amendments are proposed to take effect from 1st July 2020. If this is the case, the financial services sector has been given a very small window to react. However, it’s important to note that these amendments are only proposed at this stage and are open for public consultation until 28th February 2020.
It’s also worth noting that during the initial industry consultation, the Treasury refused to make any changes to their proposed drafts. It’s this sort of move that suggests they intend to fulfil their promise to implement all the Royal Commission’s recommendations in full.
Once the consultation period closes, then the legislation will be tabled in Parliament. Then they will go through the political machinations of possible referrals to committees and negotiations with crossbenchers. But, given the bipartisan support for the Royal Commission’s Final Report and the current political landscape, we don’t expect any major changes to the drafts as proposed.
There are some transitional provisions, and ASIC may choose to provide additional transition periods to industry, to allow them time to implement process changes.
The proposed amendments
We’ve put together a summary of proposed amendments and what these might look like.
Draft legislation | FSRC Recommendation | Summary |
Breach reporting, reference checking and remediation requirements. | 1.6, 2.7, 2.8, 2.9 and 7.2 |
|
Enforceability of industry codes. | 1.15 |
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Ongoing fee arrangements and disclosure of lack of independence. | 2.1 and 2.2 |
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RSE Trustees hold no other role. | 3.1 |
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Advice fees in super. | 3.2 and 3.3 |
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No hawking of super or insurance. | 3.4 and 4.1 |
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Super regulator roles. | 3.8, 6.3, 6.4 and 6.5 |
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Restrictions on the use of the terms ‘insurer’ and ‘insurance’. | 4.2 |
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Deferred sales model for add-on insurance. | 4.3 |
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Cap on vehicle dealer commissions. | 4.4 |
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Replacement of duty of disclosure. | 4.5 |
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Limits on trustee and director indemnities. | 4.6 |
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Financial regulator oversight authority. | 6.14 |
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ASIC directions power. | 7.2 |
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Watch this space
We’ll be providing a more detailed analysis of the amendments in due course. In the meantime, If you have any questions regarding the proposed amendments, reach out to us today.