In a joint statement with Senator Jane Hume, Treasurer Josh Frydenberg unveiled the next step in the Morrison Government’s response to the Royal Commission – a new, single disciplinary system for financial advisers.
The system is expected to be established in early 2021, and will likely be designed to reflect Commissioner Hayne’s recommendations. In his final report, Hayne said a single disciplinary system, to which all advisers would need to be registered, made sense given that “a requirement of individual registration as a condition of practice is common to most professions.”
“For example,” Hayne continued, “health practitioners (including doctors and nurses) must be registered with the Australian Health Practitioner Regulation Agency (AHPRA). Lawyers must be admitted to practise, and hold practising certificates. Architects and teachers must be registered with a relevant state or territory registration body.”
Where the Government’s move has drawn criticism, though, is in how it interacts with the code monitoring bodies that were already being developed by advice associations – which is to say, it replaces them.
“The Government thanks the professional associations and acknowledges the considerable amount of time and resources that have been undertaken towards implementing code monitoring by the end of this year,” the joint statement said.
“Treasury will immediately begin engaging with these associations, consumer representatives and other stakeholders to consult on the new system. Roundtables will be held later this year to consider policy design and how to best transition to the new system.”
In their own joint statement, six of Australia’s biggest adviser associations registered disappointment that the Government’s proposed system would supersede their code monitoring bodies. These associations have now withdrawn their applications to have Code Monitoring Australia approved as a nation-wide monitoring and enforcement scheme.
“Today’s announcement by the Government makes it unreasonable for us to proceed with CMA. We need to avoid adding complexity, further duplication and cost to the regulation of financial advice,” the associations’ statement explained.
“We are committed to ensuring that appropriate disciplinary procedures and consumer protections are in place, but are disappointed that the announcement is so late in the development process.”
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