Journal

Posted April 22, 2021

Posted By Meghann Cannon

New disciplinary system and registration requirements for financial advisers

Prepared by Kate Le Gallez & Catherine Evans.

The Government has released draft legislation to establish a new disciplinary system for financial advisers and an annual registration requirement designed to increase accountability in the profession. 

The draft Bill: 

  1. expands ASIC’s Financial Services and Credit Panel (FSCP) to become the single disciplinary body for financial advisers; 

  1. creates new sanctions and penalties for financial advisers who breach their obligations; 

  1. establishes a new registration system for financial advisers; and 

  1. winds-up FASEA and transfers its functions to the Minister responsible for administering the Corporations Act and to ASIC. 

These changes are part of the Government’s response to the Financial Services Royal Commission.  

The draft Bill also brings financial advisers who provide tax (financial) advice services under the Corporations Act for registration and disciplinary purposes. 

The draft Bill is currently open for a short consultation period. Submissions must be made by 14 May 2021. You can access the draft Bill and explanatory materials here

What you need to know – for now 

Assuming the legislation passes after the consultation period, the changes will come into force from 1 January 2022, with financial advisers having until 1 January 2023 to be registered, so there’s still time to understand the new regime. 

We’ll provide further updates as we get closer to the implementation date, but for now, we think it’s important to know: 

FSCP 

  • The new disciplinary system will cover individuals – financial advisers or planners who provide personal advice to retail clients. Licensees will only be subject to the FSCP if they are also the actual provider of the advice. 

  • The new system is broader and covers less ‘serious’ misconduct – it will consider instances where ASIC believes a financial adviser hasn’t complied with their obligations under the Corporations Act and ASIC isn’t intending to make a banning order.  

  • The FSCP can impose a range of administrative sanctions (e.g. a warning, a direction to undertake training or suspension) and/or an infringement notice. 

Registration requirements

  • All financial advisers providing personal advice to retail clients must be registered with ASIC.  

  • Licensees are responsible for registering their advisers and can begin doing so from 1 January 2022. All advisers must be registered from 1 January 2023. 

  • Registrations must be renewed annually. 

What’s next? 

We’ll continue to monitor and update you on the progress of the legislation.  

Once the legislation is finalised, the Kit Legal team will update our guidance and templates ready for the new requirements. 

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