The Government legislated a second tranche of Royal Commission recommendations, with the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 passing Parliament on the final sitting day of 2020.
The Bill enacts a suite of changes to the life insurance and superannuation sectors, including:
- Making insurance claims handling a financial service;
- Banning hawking of insurance and superannuation products; and
- Strengthening of the breach reporting regime for financial services licensees.
The Bill also establishes an enforceable code regime, which is to be administered by ASIC. Now the legislative design of the regime has been finalised the FSC will take it into account, and consult further with ASIC and consumer groups, as we continue to work on the second iteration of our Life Insurance Code of Practice.
The Government also introduced to the House of Representatives a series of financial advice reforms in the final sitting period of Parliament. These amendments deal with the deduction of advice fees and annual renewal of ongoing fee arrangements. The advice reforms have not yet been debated by the Parliament and will be on the agenda when Parliament resumes in February 2021.
The FSC has welcomed the enactment of these reforms and the Government’s continued progress towards closing out the 76 recommendations of the Hayne Royal Commission, notwithstanding the disruptive impact of the COVID-19 pandemic over 2020. Earlier this year, when lockdowns started, the FSC was successful in advocating for a pragmatic six month deferral of the RC bills. The FSC is also pleased the Government took a pragmatic approach to setting new commencement dates on changes that will take time for industry to implement.
Several important recommendations remain to be considered in detail, however, which will form part of the third tranche of the Government’s implementation roadmap. These include expansion of the Executive Accountability Regime, a new disciplinary body for financial advisers and the thorny issue of designing a workable compensation scheme of last resort.
The FSC will continue to proactively engage with the Government on behalf of the industry on what will arguably be the most complex tranche of Royal Commission reforms to date.