The Federal Government has pushed ahead with a Hayne royal commission recommendation to create a single disciplinary body for financial advisers, introducing a Bill for the proposed measure in Parliament last week.

If passed, the role of the Financial Services and Credit Panel within the Australian Securities and Investments Commission (ASIC) will be expanded to operate as the single disciplinary body.

The proposed body will ensure that less serious misconduct does not go unaddressed, Treasurer Josh Frydenberg and Financial Services Minister Jane Hume say in a joint statement.

The Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Bill 2021 also calls for additional penalties and sanctions on advisers who breached their obligations under the Corporations Act. At present sanctions are limited to banning errant advisers.

Additionally a new registration system for financial advisers will be set up to improve the accountability and transparency of the financial services sector.

The Bill also includes a measure to transfer functions from the Financial Adviser Standards and Ethics Authority (FASEA) to the minister responsible for administering the Corporations Act and to ASIC to streamline the regulation of financial advisers.

As was announced last December, the joint statement says FASEA will be wound up and its standards-making functions moved to be the responsibility of the Treasurer, supported by Treasury. ASIC will be responsible for administration of the adviser examination process.

The Bill will also give the Government the power to extend the cutoff date for certain existing financial advisers to pass the exam. The Government will use the power to extend the cutoff date to September 30 next year for advisers who have attempted the exam twice prior to the end of this year.

“These reforms will further streamline the number of bodies involved in the oversight of financial advisers, delivering improvements to the regulatory framework for the sector and enhanced access to affordable and quality financial advice for Australians,” the joint statement says.

Advisers have previously expressed concerns about the proposed reforms in a submission they made to a Treasury consultation for the draft Bill.

The Association of Financial Advisers (AFA) says the single disciplinary body should focus on significant issues and that minor matters should not need to be reported. It says matters of a more moderate nature should be able to be dealt with through an administrative process.

Decisions on how penalties will be imposed by the single disciplinary body are also a concern for the AFA.

“We note that there is no maximum timeframes stated for an adviser to be suspended or subject to a prohibition order,” the AFA submission says.

“We believe that it is appropriate to set maximums, particularly with respect to a suspension. In our view a suspension should not last for longer than six months.”

AFA says it supports the establishment of a single disciplinary body and the rationalisation of regulatory oversight of financial advisers but believes the body should not be involved in minor and administrative matters.

“This is a critical consideration in the context of the objective of focussing on misconduct,” the AFA submission says. “It is also particularly important in ensuring that the costs of the single disciplinary body are kept under control.

“Otherwise, this will be another factor in driving up the cost of financial advice and taking it out of the reach of everyday Australians.”

Click here for the AFA submission.