Annual renewal delays spark industry hopes

The Financial Sector Reform (Hayne Royal Commission Response No 2) Bill 2020 was listed on the House of Representatives’ notice paper this week but failed to come up for debate before the house was adjourned until 15 February, meaning the passage of the legislation through both houses of Parliament is likely to take some time.

Following the AFA’s recent comments that the specifics of the bill were at odds with product providers and licensees’ fee systems, the association’s general manager of policy and professionalism Phil Anderson said the AFA was still hopeful of last-minute amendments to the legislation.

“We have raised a number of issues in terms of problems with this bill and we would like to see them fixed,” Mr Anderson said.

“Ideally, it should go to a Senate committee for an inquiry, so that they can consider any issues and options for improvement.”

The comments came as the standing committee for scrutiny of bills flagged a number of areas of concern with the bill, including that it sought to make improper keeping of fee records by advisers a criminal offence punishable by a maximum five-year jail term.

“The committee's expectation is that the rationale for the imposition of significant penalties, especially if those penalties involve imprisonment, will be fully outlined in the explanatory memorandum,” the committee’s report said. 

“In this instance, the explanatory memorandum does not provide any justification as to why it is necessary and appropriate to impose a significant maximum penalty of five years imprisonment for failure to comply with the record-keeping obligation. 

“Nor does it include any reference to whether this level of penalty is comparable to similar offences in other Commonwealth legislation.”

The report requested “detailed advice” from the Treasurer as to why such a penalty was necessary, and also said it was not appropriate to leave the detail of the records that must be kept by advisers to regulation, which was not subject to parliamentary scrutiny.

Meanwhile, the AIOFP said it was also engaging with cross-bench senators including Jacqui Lambie, Rex Patrick and Pauline Hanson to raise the possibility of their withdrawing support for the bill in the Senate.

“We are greatly concerned with the proposed legislation – the disclosure material is duplicated three times in existing compliance obligations by advisers and will cost consumers an additional $1,400 [a year] to implement,” AIOFP executive director Peter Johnston said.