Post-implementation Review – Department of the Treasury
On 27 June 2012, the Corporations Amendment (Future of Financial Advice) Act 2012 received royal assent. The Treasury was required to prepare a Post-implementation Review (PIR) in relation to five measures introduced as part of the Future of Financial Advice reforms because an adequate Regulation Impact Statement was not prepared at the time. The five measures were:
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a ban on up-front and trailing commissions and like payments for both individual and group risk insurance within superannuation;
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a requirement for advisers to renew client agreement to ongoing advice fees every two years (opt-in);
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a ban on soft dollar benefits over $300;
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a limited carve-out for basic banking products from the ban on certain conflicted remuneration structures and the best interests duty; and
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the clarification of the operation of the best interests duty in relation to scaled advice.
A PIR was completed by the Department of the Treasury and was assessed as compliant by the Office of Best Practice Regulation (OBPR). The PIR found the ban on conflicted remuneration, while imposing costs on industry had enhanced consumer protections and was working efficiently and effectively. It similarly found the requirement for advisers to renew client agreements every two years, while imposing substantial costs on industry, provided significant benefits to consumers and should be continued it its current form. The other measures were also assessed by the Treasury to be working efficiently and effectively. The Treasury estimated the five measures impose an additional regulatory burden of approximately $23 million a year on business. This estimate was agreed with the OBPR.