Government announces six-month deferral of RC recommendations

AFA News 11 May 2020. On Friday, the Federal Treasurer announced that the implementation of the next two phases of Royal Commission recommendations have been deferred by six months. This means that the recommendations that the Government had previously promised to consult on and introduce legislation to the Parliament by 30 June 2020, will now be pushed back to 31 December 2020. And the items that were scheduled for 31 December 2020, will now be pushed back to 30 June 2021. The key items from these two batches, that are relevant to financial advice, are as follows:

Original Date       Revised Date                             Royal Commission Recommendation

30 June 2020       31 December 2020                           2.1 Annual Renewal and Payment

2.2 Disclosure of lack of Independence

2.7 Reference Checking

2.8 Licensees reporting compliance concerns

2.9 Licensee misconduct obligations

3.2 No advice fees from MySuper account

3.3 Limitations on deducting advice fees from choice accounts

31 Dec 2020        30 June 2021                                   2.10 New Disciplinary System

7.1 Compensation Scheme of Last Resort

We welcome the announcement of this deferral, however we believe that it is appropriate for the Government to continue to carefully consider the impact of the coronavirus on the Australian Financial Services Industry before deciding to proceed with the implementation of these recommendations. We feel it is recognised that financial advisers should be able to focus their attention on assisting clients impacted by the coronavirus crisis.

We remain hopeful that this deferral will enable the Government to carefully consider the proposals that we have put forward to improve the draft legislation and make these additional requirements both achievable and practical. It remains critical that any additional obligations are implemented in an efficient and streamlined fashion, and don’t simply add red tape without delivering any tangible value to financial advice clients