Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry - Fi

Today the Final report into the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry was released. FINAL RC Report

Find our summary extract of Recommendations HERE PDF Version

Summary:

1. Ongoing fee arrangements - Expressly renewed annually in writing by the client.

2. Lack of independence - explaining simply and concisely why the adviser is not independent, impartial and unbiased.

3. Quality of advice - By 2022 review of effectiveness of measures implemented by the government and review 'safe harbour' provision in particular s961B(2) of the Corporations Act 2001.

4. Conflicted remuneration - Grandfathering provision to be repealed as soon as practical. Life risk insurance commissions intimately reduced to zero. Review of General insurance and consumer credit insurance commissions exclusion.

5. Professional discipline of financial advisers - AFSL conditional requirement in relation to Financial Adviser reference checking and information sharing.

6. Reporting compliance concerns - AFSL conditional requirement to report ‘serious compliance concerns’ about individual financial advisers to ASIC on a quarterly basis

7. Misconduct by financial advisers - AFSL conditional requirement to take additional steps when they detect that a financial adviser has engaged in misconduct in respect of financial advice given to a retail client.

8. A new disciplinary system - a single, central, disciplinary body

Increasing protections relevant to Financial Advisers

There are recommendations that seek to change, or add to, the law, or industry codes of conduct, in ways that will increase protections to consumers from misconduct or conduct that falls below community standards and expectations. Those recommendations are:

• ongoing fee arrangements (whenever made) must be expressly renewed by the client each year.

• prohibiting advice fees from being deducted from MySuper accounts and limiting deduction of advice fees from choice accounts.

• prohibiting hawking of superannuation products and insurance products.