AFA warns on annual renewal ‘unintended consequences’

The AFA warned that annual renewal will represent another substantial cost to financial advisers and that providing advice to everyday Australians will only become more difficult under the new law, which is set to go into effect on 1 July.

“The legislation is another royal commission related bill that has been pushed through the Parliament with undue haste and lack of due process. We have repeatedly seen these bills submitted and passed without a Regulation Impact Statement or any form of parliamentary inquiry and inadequate debate of the substance of the bill,” the AFA said.

“The inevitable result of this is an increasing number of unintended consequences which will have negative implications for financial advice practices and flow on effects in terms of extra cost and complexity for clients. These issues will need to be fixed down the track.”

The bill passed Parliament last week despite significant lobbying from a number of advice bodies and proposed amendments from cross-bencher Rex Patrick, which were later withdrawn.

“We are pleased that the government has made significant improvements to the final Hayne Royal Commission Response No. 2 Bill, relative to the January 2020 exposure draft, however we are disappointed that the government has failed to take onboard our sensible feedback on the bill, which would have served to improve the efficiency of the process and to make it more user friendly, without undermining the intent,” the AFA said.

“The government will need to work out how to fix the important issue with timing differences with FDSs, that has led to ASIC recommending that advisers manually check product systems to confirm that FDSs are correct. The failure to address this as part of this reform, when the Government is simultaneously talking about red tape reduction, is disappointing.”

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