Skip to main content

Future of Financial Advice Amendments – Options-stage Regulation Impact Statement – Department of the Treasury

The Government has made a commitment to reduce the regulatory burden on businesses, community organisations and individuals.  On 20 December 2013 the Government announced changes to the regulation of the financial products and services sector, with the aim of reducing the regulatory burden for the financial advice sector.  Australia’s financial services industry is a significant part of the Australian economy.  It employs more than 400,000 people and is expected to continue growing, driven by Australia’s ageing population and increasing pool of superannuation funds.  The key reforms include:

  • Removing ‘opt-in’ requirements, (under which advisers would otherwise need to obtain their client’s approval every two years for ongoing fee arrangements);
  • Limiting annual fee disclosures to prospective clients only;
  • Removing a ‘catch-all’ provision in the best interest duty, as well as providing a safe harbour for satisfying the best interest duty; and
  • Exempting general advice from the definition of ‘conflicted remuneration’.

The reforms are expected to have major impacts on the sector.  These impacts include estimated average ongoing compliance cost savings of around $191 million per year, as well as once-off implementation cost savings of around $88 million. An options-stage RIS has been prepared by the Department of the Treasury to facilitate consultation.  As the proposal relates to an election commitment, alternative options have not been considered.  Further information on the policy development process is available from the Treasury FOFA homepage. The options-stage RIS has been certified by the Department of the Treasury.