The Financial Sector Reform (Hayne Royal Commission Response No. 2) Bill 2020 implementing a further four recommendations of the Financial Services Royal Commission to improve consumer protections (as outlined below) was introduced into the House of Representatives late last year and has just passed through the lower house.
The four new factors, each aiming to commence 1 July 2021, include the following.
Ongoing fee arrangements (recommendation 2.1)
The bill will amend the Corporations Act to require financial services providers that receive fees (fee recipients) under an ongoing fee arrangement to:
- provide clients with a single document each year that outlines the fees that will be charged and the services that the client will be entitled to in the following 12 months and which seeks annual renewal from clients for all ongoing fee arrangements; and
- obtain written consent before fees under an ongoing fee arrangement can be deducted from a client’s account.
Disclosure of lack of independence (recommendation 2.2)
The bill will amend the Corporations Act to require a providing entity (a financial services licensee or authorised representative) to give a written disclosure of lack of independence where they are authorised to provide personal advice to a retail client.
Advice fees in superannuation (recommendations 3.2 and
The bill will amend the SIS Act to provide greater protection for superannuation members against paying fees for no service. The amendments increase the visibility of advice fees for all superannuation products and prohibit the charging of ongoing advice fees from MySuper products.
If legislated, the measuires will apply from 1 July 2021, with a 12-month transitional period for arrangements entered into before 1 July 2021.