AFA News 18 February 2021. The financial advice sector has been subject to significant change each and every year for a long time. 2021 will be another big year for change. The new Annual Renewal regime is due to commence from 1 July 2021, with a 12-month transition period. That reform will have a big impact on the majority of financial advisers. It is also the last year for existing advisers to pass the exam, which must be a high priority for the thousands of advisers who are yet to sit the exam.
There are other important changes this year that will impact licensees and advisers. 1 October 2021 is the start date for a number of other important changes, including the following:
- Product Design and Distribution Obligations. This will have a broader impact on product providers, however financial advisers will have additional record keeping and reporting obligations.
- Mandatory Reference Checking. Reference checking will become mandatory with an obligation on licensees to obtain a reference for all new financial advisers and for former licensees to provide a reference. ASIC will provide a template and further guidance on these requirements. Please click here for a copy of the AFA’s 29 January 2021 submission to ASIC on Reference Checking.
- A new Breach Reporting regime. The threshold for reporting breaches to ASIC has been substantially reduced as a result of the Royal Commission recommendations, and this will lead to a significant increase in reportable breaches. The Government are still working on a regulation that will hopefully reduce the range of matters that are reportable, and ASIC will provide further guidance in due course. One element of this new regime is that licensees will have a new obligation to report breaches by advisers of other licensees, and this will create a range of challenges.
- New Internal Dispute Resolution requirements. As a result of the introduction of a new regulatory guide on complaints, there have been a number of changes to the requirements for the management of the complaints process, including the need to capture all complaints (including those resolved within 5 days), to record complaints from social media on company social media accounts and a reduction in the maximum timeframe to respond to complaints from 45 days to 30 days. In the future there will also be new obligations to provide regular reporting of complaints to ASIC.
A number of the changes above will have the biggest impact on licensees. We appreciate that larger licensees have their own compliance people who will assist with the implementation of these changes. For smaller licensees, they may rely upon compliance consultants or other service providers. It is important to know that these changes are coming, even though some of the detail is yet to be finalised.
We will keep members updated on these new requirements as the guidance gets released and as we get closer to these key start dates.
For any feedback on these matters, please email firstname.lastname@example.org
Issued 18.02.2021. AFA Policy & Education Update