Insight,

2021: A year of financial services reforms – what you need to do and by when.

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Most of the legislation to implement Government's responses to recommendations of the Financial Services Royal Commission final report has been passed. 

Many provisions commence in 2021.  We thought a timetable of the reforms and a couple of other reforms might be useful (see below).

Individual reforms should not be implemented in isolation.  For example how products are sold and distributed must comply with the stricter hawking prohibitions and the design and distribution obligations and for insurance products the new add-on insurance regime.  Compliance and governance processes will need to be updated.

Many of the reforms will necessitate new AFS licence or variations.  We expect a significant increase in applications for AFS licences and variations and recommend that applications be lodged as soon as practical.  Over the last 3 years ASIC has only approved about 300 AFSL applications per year.

Wait there's more …

The timelines above cover the reforms that have been legislated.  There are a number of other reforms at various stages including:

  • new directions power for ASIC (exposure draft Bill released)
  • strengthening the security of Australia's critical infrastructure including in the financial services and markets sector (Bill introduced into Parliament, draft Rules released), for further information click here and here
  • ASIC to review the remaining exemptions to the ban on conflicted remuneration in 2022
  • financial accountability regime for all APRA regulated entities (Proposals paper released), for further information click here
  • retirement income covenant (RIC) for superannuation funds (deferred to 1 July 2022)
  • wind up of FASEA on 1 January 2022 and establish a new disciplinary body for financial advisers (Bill introduced into Parliament)
  • draft Prudential Practice Guide CPG 229 Climate Change Financial Risks released for consultation (available here) with the final PPG expected to be released before the end of 2021, for further information click here
  • draft Prudential Practice Guide CPG 511 Remuneration released for consultation (available here) with the final PPG expected to be released in the second half of 2021, for further information click here
  • proposed reforms to the regulation of proxy advisers, including new obligations concerning trustees of superannuation funds in relation to voting at shareholder meetings of investee companies, for further information click here

 

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