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Recent developments in the financial advice sector

The Australian financial advice industry has received a lot of attention from the Government and regulators in recent years, especially following the findings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (the Royal Commission).


The Royal Commission revealed that the reforms in regulating financial advice – including the Future of Financial Advice (FOFA), establishment of a Financial Advisers Register and development of professional standards – were not enough to provide consumers with adequate protection and access to affordable financial advice.


In the last couple of years, the shortcomings of past reforms have been addressed through the Better Advice legislation, ASIC’s affordable advice review and other recent developments in the financial advice industry. This blog provides an update on these developments and how your organisation can achieve and maintain compliance.



Better advice legislation

After initially being introduced into Parliament in June 2021, the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 was passed by the Government in October 2021. The Better Advice legislation implements recommendation 2.10 of the Royal Commission, to strengthen consumer protections and streamline oversight of the financial advice industry.


"Ensuring that Australians can continue to access high quality, professional and affordable financial advice is incredibly important as we emerge from the pandemic and I commend this bill to the Senate." - Financial Services Minister Jane Hume

The legislation enacts the following changes to the financial advice sector:

  • Removes the Tax Practitioners Board (TPB) as an advice regulator so financial advisers are no longer subject to duplicate disciplinary and registration systems.

  • Winds up the Financial Adviser Standards and Ethics Authority (FASEA) and transfers its functions to Treasury and ASIC.

  • Establishes the Financial Services and Credit Panel within ASIC as the single disciplinary body.

  • The panel – who will hear complaints about adviser compliance – will consist of members of the industry appointed by the relevant Minister and misconduct will be primarily assessed by peer review.

  • Introduces a new system and fees for the financial adviser exam and registration.

  • Assigns the responsibility for administering the financial adviser exam to ASIC, using a set framework.

  • Outlines the registration, education and training requirements for financial advisers providing tax (financial) advice services.

  • Creates additional penalties and sanctions for financial advisers who have breached their obligations under the Corporations Act.

  • Prescribes which administrative sanctions made against a financial adviser must be disclosed on the Financial Advisers Register for greater public transparency.

These changes apply from 1 January 2022. However, the Government has confirmed that for advisers who have genuinely attempted the exam twice prior to 1 January 2022, it will extend the cut-off date to 30 September 2022.


Affordable advice review

In November 2020, ASIC released Consultation Paper 332 Promoting access to affordable advice for consumers, seeking input from financial advice industry participants and stakeholders to understand the issues in providing good quality affordable personal advice and how to improve consumer access to such advice.


Following the consultation period, ASIC committed to the following initiatives:

  • Working with the industry on determining steps to address issues surrounding providing good quality affordable personal advice.

  • Setting out actions to help the industry provide both good quality limited advice and affordable personal advice.<